Moody's lifts outlook for German banks for first time since 2008
FRANKFURT, Sept 6
FRANKFURT, Sept 6 (Reuters) - Credit rating agency Moody's has raised its outlook for Germany's banks for the first time since the financial crisis started in 2008, saying crisis-related losses were shrinking and capital strength improving.
Moody's said on Friday it had moved its outlook for the German banking system, often seen as a weak link in Europe's leading economy, to "stable" from "negative".
"German banks are now more able to withstand shocks," said Moody's banking analyst Katharina Barten.
The Association of German Public Banks, which represents a group of regional state-owned lenders called landesbanks - most of which were bailed out in the crisis - said Moody's decision showed that the right actions were taken after the crisis.
"Especially the landesbank have drawn their conclusions from the crisis and adjusted their business models to the new challenges," association President Gunter Dunkel said.
Michael Kemmer, managing director of the Association of German Banks, said lenders had their risks under control now and were concentrating on their core activities.
While European policymakers have often named Germany as an example for economic strength, some have also criticised the country for a fragile and fragmented banking system.
Germany's banking system consists of Deutsche Bank and Commerzbank at the top, five larger landesbanks as well as a few foreign and cooperative lenders in the middle and a swathe of savings banks and cooperative lenders at the bottom.
In the financial crisis, the state had to bail out Commerzbank, landesbanks like LBBW, BayernLB and HSH Nordbank. It also nationalised mortgage lender Hypo Real Estate and helped shut down WestLB.
A European Union study has found that the landesbanks alone - regularly scolded for being politically influenced and making bold investments - have cost German taxpayers a total of 70 billion euros, the bulk stemming from post-Lehman bailouts.
While Moody's said German banks seemed to have put the worst behind them, it added that challenges such as low interest rates and overcapacity continued to weigh on their earnings.
Banks' exposure to volatile asset classes had declined but still posed a risk, Moody's said, adding ship financiers - like HSH, Commerzbank or NordLB - would continue to face considerable headwinds as that sector's crisis is unlikely to end quickly. (Reporting by Arno Schuetze; Editing by Mark Potter)
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