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How sick are Europe's banks?

Wednesday, February 10, 2016 - 01:36

Deutsche Bank shares have recovered some ground after hitting 30 year lows. But as Hayley Platt reports, concern about the health of Europe's banks in the face a global slowdown is growing.

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Germany may be leading the way in the euro zone but the same can't be said about its flagship bank. Deutsche Bank was slow to reform and restructure and it's paying the price. Its shares have fallen 40 per cent since the start of the year and they hit a 30-year low on Tuesday. That's on top of numerous fines and a recent 6.8 billion euro loss. Brenda Kelly is from London Capital Group (SOUNDBITE) (English) LONDON CAPITAL GROUP, MARKET ANALYST, BRENDA KELLY, SAYING: "They are selling a lot of assets, they are moving away from the retail sector and of course with the global slow-down that we're seeing, there are fears that the investment arm will not keep up the pace when it lets go of its retail arm." European bank shares have lost more than $240 billion since the start of the year - that's nearly a quarter of their value. And the sell off has been worse than after the financial crisis. There's a long list of concerns, including slumping oil, soaring technology costs and a slowdown in China. The market turmoil and the ECB's attempts to revive the euro zone aren't helping. (SOUNDBITE) (English) LONDON CAPITAL GROUP, MARKET ANALYST, BRENDA KELLY, SAYING: "We're seeing negative interest rates from the ECB, which is clearly impacting and will be obviously said to impact profitability going forward, in terms of the margins that the banks can use." Shares recovered some ground on Wednesday But exposure to China remains a worry for HSBC and Standard Chartered. And there's speculation Barclay's may tap shareholders for cash to strengthen its balance sheets. That's a possibility at Deutsche too, although some analysts say don't panic yet - there's no sign of stress in the financial system.

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How sick are Europe's banks?

Wednesday, February 10, 2016 - 01:36