The German hawks are back, the old-fashioned ones. And Christine Lagarde , president of the ECB, may have a problem. It was last September 8 when the governor of the Bundesbank, the German central bank, Jens Weidmann (who will leave the leadership of Buba at the end of the year after 10 years) asked Frankfurt to start putting the brakes on ultra-accommodative monetary policy. seen as a breeding ground for inflation. Stimuli to the economy, it should be remembered, which are based essentially on a program for the purchase of securities worth 1,850 billion and interest rates nailed to zero or just below. A message, by no means subliminal, which had only slightly anticipated the rift between the German credit system and the Eurotower. GERMAN SINK
This time another heavyweight took to the field, Deutsche Bank CEO Chirstian Sewing . The man at the head of the first German bank, recaptured by the hair three years ago and saved from safe crack, after years of financial statements in the deep red and stuffed with derivatives and toxic products. But above all at the head of the powerful Association of German Banks (Agb), the union of Teutonic banks, our Abi.
The manager showed the cards, attacking Lagarde and her monetary policy head-on. “The alleged panacea of the past years – low interest rates with seemingly stable prices – has lost its effect, now we are struggling with the side effects. Monetary policy has to counter this, and as soon as possible, ”he said. According to the banker, “the consequences of this ultra-loose monetary policy will become increasingly difficult to correct the longer the central banks do not reverse course”.
And for this Lagarde should act immediately, “better sooner than later”. The meaning is clear, with inflation there is little to joke about and continuing to keep the cost of money too low and stuffing liquidity institutions risks exposing them to a tsunami of loans, the possibilities of which are all to be verified. Especially if an overheating of prices were to ignite the first rebounds of the post-pandemic continental economies. However, there is a problem: the former director of the IMF, today at the helm of the ECB, does not want to hear about pulling the oars into the boat prematurely. THE FED IS FAR AWAY
Lagarde, in short, will not do as Jerome Powell, outgoing governor of the Fed, anxious to start tapering once and for all (the disengagement from stimuli and the return of rates to market level). The policy of the ECB will not change radically in the coming months, as evidenced by the decision on the extension of the Pepp, expiring in March 2022, which will only be taken in December. And in any case, even if it were to leave the scene, purchases of government bonds will continue in other forms. Above all: rates will not go down before 2023 and it is said that they will do so after. All this because “overall, we continue to expect medium-term inflation to remain below our new symmetrical target of 2%”. Translated, inflation is a problem but not that big. Not for now at least. THE PAST (AND PRESENT) OF GERMAN BANKS
Perhaps the most correct reading of the German outburst lies in the fear of the German banks themselves of losing the benefits of the reorganization implemented after dark years. Starting with Deutsche Bank itself, which up to 2014 boasted derivatives in the belly, according to some estimates, amounting to 54 trillion. It is no surprise that in 2019, in the aftermath of the sensational failure of the wedding with the second bank in Germany, Commerzbank (15% owned by the federal government), the German credit institution has budgeted losses of 5.3 billion euro to then review the light in 2020 with a profit of 113 million.
So, all over
It seems, as long as we don’t put the ECB and inflation into it. In the third quarter, Deutsche Bank posted a net profit attributable to shareholders of 194 million euros in the third quarter of 2021, up 6.6% compared to 182 million a year earlier and higher than the estimated 135 million euros. by analysts. This is the fifth consecutive quarter of earnings, the longest positive streak since 2012. In the same period, revenues amounted to € 6.04 billion, up from € 5.94 billion in the same period of 2020. Pre-tax profit was 554 million euros (+ 15% on the third quarter of 2020).
And Commerzbank
Good news, even here, after a thrilling 2020, or a loss of at least 2.9 billion euros, compared to the profit of 585 million euros generated in the same period last year. And restructuring charges of € 800 million and goodwill write-downs of € 1.5 billion, closing over 400 branches. In the last quarter of 2021, the German banking group recorded a net profit of 403 million euros, which compares with a loss of 60 million in the third quarter of 2020 and a market expectation of 245 million euros. Operating profit amounted to 472 million euros, up from 168 million a year ago. Revenues were € 2.006 billion, quite in line with last year, when they amounted to € 2.033 billion.
