Euro Finance Week: The banks’ balancing act

ZAndreas Scholz was probably not in the mood for dancing at that moment, but the comment was entirely correct. “There would be enough space here for a tango,” said the managing director of the Euro Finance Group, which is responsible for organizing the most important banking conference in Frankfurt. The Euro Finance Week has been taking place in the financial center for 23 years, and of course such an event lives not only from the content, but also from the exchange between its participants. But that is canceled this year: Like all conference formats, the Euro Finance Week has to do without an audience due to the Corona regulations.

This is not an easy situation for the event industry, and it is all honorable that the organizers have organized a conference with four cameras from the zoo society house that deserves the name. Especially since these days there are also important topics that move the financial sector. Deutsche Bank boss Christian Sewing, for example, recalled on Monday that the banks proved to be more robust in the Corona crisis than they were in times of the financial crisis. Still: “We are simply not profitable enough,” said Sewing.

The Deutsche Bank boss sees the fragmentation of the German banking landscape as the biggest structural problem in the industry. “More than 5,000 financial institutions in Europe are simply far too many.” But the political framework for consolidation is not yet in place, criticizes Sewing. “We need the completion of the banking union so that cross-border cooperation becomes more attractive.” Will Deutsche Bank then also merge with another company across national borders? Sewing does not specifically comment on this, but it is always good to be a certain size in order to be able to talk to any partners at eye level. “Everything else is speculation.”

A hybrid format

At the European Central Bank, too, there is a need to reduce excess capacities in order to “remedy the persistently low profitability”, as the Vice President of the ECB, Luis de Guindos, says. The need to address structural problems is more urgent than ever. “Consolidation through mergers and acquisitions is a potential way to reduce excess capacity in this sector.”

The banks are facing a difficult balancing act because, on the one hand, they have to position themselves more efficiently, on the other hand, they are operating in a difficult environment and, thirdly, they do not yet know how the coronavirus consequences will affect their loan books.

The Euro Finance Week has also suffered from the Corona crisis. Just recently, the Euro Finance Group, a subsidiary of Deutscher Fachverlag, planned to hold the conference as a hybrid format, with around 150 participants on site and the others in front of the screens. Then you could at least have shown the new location, after all, the congress week is taking place for the first time in the Society House of the Frankfurt Zoo. But now everything turned out differently. “Of course we would have liked to have spectators on site,” says Andreas Scholz, on the other hand he announced in the morning that around 1,500 viewers had switched to online. So many would certainly not have fit in the hall, so digitization in the context of Corona also has its good points.

The banks have also had to face this issue for a number of years, the number of branch visitors to financial institutions is falling in favor of digital banking and mobile payment. On the other hand, the pandemic has also resulted in a renaissance in personal advice, says Bettina Orlopp, Commerzbank’s CFO. The severe cuts caused by the corona virus were also cushioned by the financial institutions and then often in personal dialogue with the bank advisor, Orlopp said. “Because people work here who have known the companies and their business models for years, they were able to help quickly.” This shows “that it may not be so good to always go to the bank that has the cheapest price, because right now in a crisis the most reliable partner is the better one ”.

Good advice or not: DZ Bank’s co-chairman of the board, Cornelius Riese, is convinced that he will see an increased number of insolvencies in the next few months, and these would also be reflected in the bank’s balance sheets. “The industry has a long, cold winter ahead of it, and it will last longer than the meteorological winter.” Until then, the banks will have to deal with the consequences of Covid, but also with the time after the pandemic. “The crisis is allowed to us don’t block your view of fundamental upheavals in the world, ”says Sewing.

Despite these challenging times, there is still room for one or two tongue-in-cheek puns at Euro Finance Week. For example, when it comes to the top-class cast of a discussion. The moderator calls it the elephant round. But that, he added quickly, shouldn’t be taken too literally in view of the situation in the zoo.

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