If interest rates remain this low, "the industry will have to take further countermeasures and think about new solutions and other business models," said the president of the federal financial supervisory authority (bafin), elke konig, at a banking conference of the "borsen-zeitung" in frankfurt on wednesday, referring to building societies.
"The medicine that the ECB has administered to the banks and the states in order to trim them has side effects, like any medicine," konig noted. The european central bank (ECB) lowered the already extremely low prime rate in the euro zone to 0.5 percent in may 2013. Since then, the interest rate has remained at this record low. Building societies are struggling with the fact that customers continue to save for old contracts with comparatively high interest rates. Providers are having difficulty generating the promised returns with the current extremely low interest rates.
The low interest rates have had a "noticeable impact on the earnings situation of the financial institutions," explained martin zielke, member of the board of managing directors of commerzbank for private customers. "Any bank that wants to be successful in the retail banking business must radically restructure its business model. Only tweaking small parts of the business model will no longer be enough."
For banks, it is important "that the institutions have enough equity capital to be able to cushion the risks, also from the interest rate risk," said konig. The topic will also be on the agenda for the upcoming ECB balance sheet review. The ECB is to take over supervision of the largest banks in the eurozone in november 2014. Before that, the ECB and national supervisors want to examine the balance sheets of 124 banking groups. In addition, a stress test is being prepared.