Banks in Europe: falling status and loss of profits

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Every person strives for comfort and complete security. At the same time, the safety of property and funds takes a priority position. Most people trust banks to store their savings. The main difference between the financial institutions chosen for deposits is the territorial location. If the majority of clients chooses national organizations, then the remaining small group prefers credit organizations, the status and image of which has been confirmed for years, even centuries of work. These primarily include European banks.

“Gentlemen” from the Old World

These organizations are the world's oldest financial institutions. For a long period of time, institutions in Switzerland were considered one of the "strongest" and best banks. At this stage, stable and efficient banks in Europe include institutions located in other countries in their list. It is noteworthy that it is the institutions of the Old World that have a significant impact on the development of the global sphere of financing, investment and lending. The reason for this is the unification of European countries under the auspices of the European Union. The introduction of a single currency made it possible to more effectively consider proposals for injecting cash flows into projects in various countries. And manipulate refinancing indices with varying degrees of success. Ultimately, because of the "game" with international lending rates, many European banks are "under attack" by the antimonopoly committee. This commission is going to apply large financial sanctions to many credit institutions.

German "games"

Due to manipulations with refinancing rates, a high-ranking Deutsche Bank (Germany) is forced to set aside about 1 billion 200 thousand euros for litigation. And that's just for the first hearing. The sad fate of this organization was also shared by JP Morgan Chaise, HSBC and many others. The Antimonopoly Committee of the European Union accuses these institutions of manipulating the Libor rate (London Interbank Offered Rate). The result of this grand story was a fine of two and a half billion euros.

Not recovering from the shock, the German bank was once again involved in the second scandal. This time, the commission found violations in the process of setting the average Euribor funding rate. In simple terms, this index shows the percentage at which European banks lend to each othermoney for a certain period. This refinancing instrument is also called the International Offered Rate.

At the same time, the scandals that erupted around this issue had a detrimental effect on the overall income of the institution. In 2013, Deutsche Bank's net profit decreased by 15 times compared to the previous one and for the penultimate quarter amounted to just over 50 million euros.

Sad "ally" from Switzerland

The well-known UBS-bank (Switzerland) is also a participant in the sad event about the “game” with the Libor rate. Having paid a huge fine, the organization "closed" 2012 with a deep minus of 1.7 billion euros. 2013 turned out to be more successful in the activities of the financial institution. Although the bank turned its work into a profitable direction, the planned 15% profitability, alas, was not received.

Many financiers will no doubt agree that for the entire world economy, the banking "games" of Old World establishments cannot end in anything good: organizations, depositors, countries and continents suffer losses. Many credit institutions are under threat of ruin.