Bankers argue with supervisors: "We are not in crisis mode"

Almost all the top bankers who spoke at the start of Euro Finance Week on Monday agreed on one point: the situation is better than the mood.

Only Lutz Diederichs added something on top: "The numbers are better than the situation and the mood," said the German boss of the French BNP Paribas.

"We are not yet in crisis mode," he emphasized - neither with regard to corporate loans nor mortgage lending.

Even Thomas Groß, head of the Landesbank Hessen-Thüringen, who recently issued unusually clear warnings about corporate insolvencies and loan defaults, did not want to be seen as a "dark prophet" in this round.

Tim Kanning

Editor in Business.

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In fact, the quarterly figures presented by the banks these days were decent.

After all, most institutes are already benefiting from the rising interest rates around the world, while the risks from the Ukraine war and its consequences, as well as the raging inflation, have so far hardly been reflected in their business figures.

"The crystal ball has never been so foggy"

Of course, looking into the future is more exciting than looking at the current situation.

And here the bank board members have to state that the uncertainties are huge.

Although it's already November, the forecasts for German economic growth next year vary more than ever before, said Cornelius Riese, Co-CEO of DZ Bank, and became graphic: "The crystal ball has never been so foggy."

Of course, the bankers cannot hide the fact that the crisis is already having its first economic victims.

The winter will be "particularly cold" for small energy-intensive companies such as bakeries and paper mills, which cannot simply shift their production abroad, said Riese.

Entrepreneurial tragedies were already taking place there.

He also takes seriously the danger of creeping de-industrialization in Germany due to high energy prices.

"We see an investment flow towards the USA and other states," said Riese.

“The question is whether we will manage to keep the industrial core in Germany in the next few years.

One factor for this is trust in German energy policy.” Andreas Kamp, CFO of HSBC Germany, warned: “There are companies whose buffers have already been used up in the Corona crisis,” he said.

If they could not pass on their own cost increases to their customers, it would be difficult.

Optimism is a banker's first duty

But optimism is the banker's first duty;

and that seems to be especially true in times like these.

Riese criticized the "prophets of doom" who wanted to see the sick man of Europe again in Germany.

They underestimated the adaptability of German SMEs and industry.

Bettina Orlopp, CFO at Commerzbank, added.

"Companies don't just say: Oh God, we're facing a major crisis.

Instead, they prepare for it every day.”

The bankers also guarded against overly loud warnings that they themselves could soon get into trouble as a result of all the crises.

Stefan Wintels, CEO of the state bank KfW, said in his opening speech: "We mustn't talk about a financial crisis now." And HSBC man Kamp tried the mantra of Deutsche Bank boss Christian Sewing that the banks are part of the wanted to be the solution and not the problem.

The reason for this is that the banks fear that their supervisors will take a tougher approach, which has led to an unusually open dispute between the two sides for several weeks.

"The current level of capital is absolutely sufficient," said Helaba boss Groß, adding that he saw no dangers for the banking sector.

On the other hand, regulation tends to be counterproductive in many places.

Riese from DZ Bank was fundamental: he would like a kind of audit office for supervision that would check that every new rule was implemented efficiently and sensibly.

And anyway, a supervisory authority that keeps a close eye on the big American tech companies is much more important than even more requirements for the banks.

Admonishing overseers

The leading bank supervisors at the conference felt compelled once again to appeal to the banks not to underestimate the dangers of the current crises for their own business.

There is a tendency in the industry to take it for granted that the public sector will step in if the situation worsens, said Andrea Enria, the chief bank supervisor at the European Central Bank (ECB).

Many bankers would ask him whether the regulator would then react with flexibility again.

"My first recommendation is, don't assume that this time there will be public aid on the same scale and on the same scale as there was during the pandemic."

The head of the German banking regulator Bafin, Mark Branson, said: “Now the banks are earning well.

It's time to put as much aside as possible.” Germany's top financial supervisor warned the banks against gambling away their resilient starting position.

"The financial sector has not been at the center of the turbulence so far," said the Bafin boss.

However, your customers are affected by stormy times.

And the head of banking supervision at the Bundesbank, Joachim Wuermeling, called on the banks not to rely too much on their expectations.

It is currently not only important to assess the overall weather situation, i.e. the macro view, but to check each customer individually for their credit risks.