A negative image of banks was entrenched in our minds after the global financial crisis more than 10 years ago, and today they are paying a heavy price despite their pivotal role in mitigating the repercussions of the Covid-19 crisis.

In the report published by the French newspaper "Lesechos" (lesechos), writer Eric Le Bouchi said that by surrendering to the temptations of speculation and making quick profits in 2007, the banks caused a devastating financial crisis that required the intervention of governments to save them from bankruptcy, and today they are paying the price for that adventure despite their different dealings. With the Corona crisis.

The writer confirms that most of the banks in the world - apart from some major banks in the United States - have recruited to support their customers, and stood by small and medium companies and traders in the Corona crisis, but that did not change much of the negative image entrenched in the minds since 2007, which made the major banks In the United States and Europe, losses are incurred by the reluctance of shareholders.

The banking sector deteriorated

The author believes that the Corona crisis could be a good opportunity to rediscover the advantages of banks in their traditional form, those institutions that master providing services to their customers and provide them with assistance in crises and difficult times, as is happening now.

But the irony - as the writer says - is that shareholders are currently punishing banks despite their pivotal role in confronting the Corona crisis, as bank shares collapsed in the stock exchanges by a third.

The author explains that the banking sector was mainly experiencing a major crisis due to low interest rates, high stock prices (they have increased five times since 2007), and intense competition with the financial technology sector, before the Corona pandemic came and exacerbated the severity of the crisis.

The market value of the four technology giants is about a trillion dollars (Reuters)

In this context, Santander Group recorded its first quarterly loss in 163 years, Wells Fargo reached a critical financial position, while HSBC’s profits declined by 65%. % In the first half of this year.

While the market value of each of the four technology and Internet giants (Google, Amazon, Microsoft and Apple) is one trillion dollars (one thousand billion), the banking giant, JP Morgan, has a value of 300 billion dollars, and HSBC. $ 70 billion, and the French bank BNP Paribas $ 50 billion.

The total market value of well-established banks such as UniCredit, Barclays and Deutsche Bank is less than that of the video chat startup Zoom, which was founded in 2011.

It is noteworthy that the market value of Zoom rose to more than $ 129 billion Tuesday in light of the Corona crisis, before it fell to about $ 109 billion yesterday, compared to only $ 16 billion when the public offering in April 2019.

The need for a new model

The writer believes that the banking sector has played its role as it should in the current crisis, as banks have lent their clients in the United States and Europe up to a trillion dollars.

But in light of the deteriorating state of the economy, the crisis that vital sectors such as aviation and tourism are going through, and the strongly expected bankruptcies in the coming period, the efforts of banks will not be feasible without government intervention that restores balance to the stock market and saves the banking sector from an unknown fate, according to the writer.

The writer believes that banks still play a vital role in the economies of countries, by developing new industries and supporting troubled companies, which was shown by the Covid-19 crisis, but they are required - according to his opinion - to develop their services, reduce their costs and gain the confidence of their customers again, that is, to adopt A new model that would restore to it - in the midst of the current crisis - the luster it acquired after the Second World War.

The writer concludes by saying that the shareholders make a serious mistake when they turn their backs on the banks and punish them for previous mistakes, "because we still desperately need them," as he put it.