Manfred Knof, CEO of Commerzbank, claims that while the bank has prepared for a rise in non-performing loans, the situation is “certainly not a disaster or default issue” given that a “moderate recession” is probably on the horizon.
At the European Banking Congress on Friday in Frankfurt, Knof told CNBC’s Annette Weisbach, “We have already taken provisions, but right now we don’t see a lot of challenges ahead of us.”
Nonperforming loans, commonly referred to as “bad debt,” are bank loans that are likely to be repaid partially or late.
Next year, Knof said, “we will have a very stable and good finish.”
Other economic forecast estimates for Europe have not been as upbeat. According to Berenberg’s chief economist, Holger Schmieding, consumer confidence has “plummeted so dramatically that the recession will probably not be shallow.”
Additionally, the CEO of Commerzbank stated that “optimism” has been established that the sector can manage the current economic situation due to the acts of regulators, lawmakers, and corporate banks.
“We have two challenging years ahead of us, but we are tenacious and powerful. We should be able to manage the problem [if] we all work together,” he remarked.
Christian Sewing, the CEO of Deutsche Bank, was more forthright in his remarks on regulation in Germany and throughout Europe, expressing his worry that “the pendulum is likely to swing too far” and might “structurally disadvantage” the sector relative to competitors on a global scale.
Speaking at the same event on Friday, he stated, “The current regulatory structure does little to strengthen European banks.” We should examine any potential overreaches rather than further enlarging and tightening.
If regulation “continues as it has,” he continued, Europe “will soon lose its leadership” in sustainable finance, despite the fact that the continent presently leads the field.
