FRANKFURT, June 28 (Xinhua) — Bankers and officials attending the Frankfurt Euro Finance Summit on Monday have called for faster progress in the European banking and capital markets unions as well as in digital and sustainable transition.
Christian Sewing, chief executive officer of Deutsche Bank, told the conference that “a stronger capital market can only emerge at European level — with a true single financial market,” adding that a faster pace in completing banking and capital markets unions would produce many winners.
“A common European capital market is a prerequisite for us to succeed in the transformation to a sustainable economy,” Sewing also noted. The bloc has already agreed on a massive recovery fund to help the region’s economy emerge stronger from the COVID-19 pandemic and become greener, more digital and more resilient.
Heads of major European banks agreed that the pandemic has not become a “bank crisis,” but rather worked as “an accelerator,” in particular for the digital transition.
Lutz Diederichs, head for German business at the French bank BNP Paribas, said European banks are likely to see their return on equity to fall in view of the persistently low interest rates and the impending higher loan defaults. He thus called for the banks to be proactive this time, making use of the current opportunity of digitization rather than restoring to the status quo.
Nick Jue, head of ING Germany, identified changes in the customer demand as well, saying more and more customers are asking for environmentally and socially sustainable investments. European banks have to adapt their business model to the changing world, he added.
Improving economic growth should support banks’ earnings, but is not enough by itself to bring the sector back to sustainable profitability, Luis de Guindos, vice president of the European Central Bank (ECB), said while giving a keynote at the conference.
“In the medium and long term, the post-pandemic world presents banks with new challenges but also with opportunities to overcome longstanding structural issues,” de Guindos said.
The ECB official suggested that banks capitalize on the change in customer behavior and shift towards digital banking, enhance profitability and cost-efficiency via consolidation, and better incorporate environmental, social and governance factors into their decision-making processes and risk management frameworks.
Originally Appeared Here