Commerzbank chief says he isn’t getting ready for catastrophe, however gentle recession

Commerzbank CEO Manfred Knof says the financial institution has ready for an uplift in nonperforming loans, however the scenario is “positively not a catastrophe or default subject” as a “gentle recession” is probably going within the playing cards.

“We have now already made provisions however nonetheless in the intervening time we do not see quite a lot of points forward of us,” Knof informed CNBC’s Annette Weisbach on the European Banking Congress in Frankfurt Friday.

Nonperforming loans are financial institution loans more likely to be repaid late or not in full and are also called “dangerous debt.”

“We’re trying ahead to a really secure and good consequence subsequent yr,” Knof stated.

Different predictions for Europe’s financial outlook haven’t been as optimistic. The chief economist at Berenberg, Holger Schmieding, informed CNBC that client confidence had “plunged so badly that the recession will possible not be shallow.”

The Commerzbank CEO additionally stated the actions of regulators, politicians and company banks have established “optimism” that the sector can handle the present financial setting. 

“We could have two troublesome years forward of us however we’re resilient and robust. [If] all of us work collectively we ought to be [able to] deal with the scenario,” he stated.

The chief of Deutsche Financial institution Christian Stitching was extra frank in his feedback about regulation in Germany and Europe extra extensively, saying he was involved that “the pendulum is about to swing too far” and will “structurally drawback” the business amongst world opponents. 

“The present regulatory framework does little to strengthen European banks,” he stated, talking on the identical occasion Friday. “As an alternative of additional increasing and tightening, we also needs to take a look at the place it might need gone too far.”

He added that whereas Europe is at present a pacesetter in sustainable finance, the bloc “will quickly lose this management” if regulation “continues because it has.”