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2016: Europe banks' annus horribilis?

Thursday, December 29, 2016 - 01:39

Italy's in the grip of a banking crisis but Monte dei Paschi isn't the only lender hoping for a change of fortunes next year. As Ivor Bennett reports, it's been an 'annus horribilis' for several of Europe's biggest lenders.

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In 2008, its chief executive claimed it was the one of the strongest banks in the world. Fast forward 8 years, the IMF called it the most dangerous. Deutsche Bank this year's big banking shock. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "Like all these banks, because they are so complicated, at face value, you can't see the problems until you start lifting up the stones and then you can see what's happening. And actually what you've got is a very risky organisation, which unfortunately, it was probably so complicated, no one actually understood how much risk was that." One risk everyone did understand was Monte dei Paschi. And even with a bailout, it hasn't gone away. (SOUNDBITE) (English) LONDON CAPITAL GROUP, SENIOR MARKET ANALYST, JASPER LAWLER, SAYING: "I think there are significant risk surrounding Italy's banks going into 2017." It's not hard to see why, in a sector saddled with over 350 billion euros of bad loans. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "The danger with the Italian banking system is that it becomes endemic throughout entire system. So that when one falls the rest of it starts collapsing." If that was last year then what about next? The Bank of England warning of a challenging outlook after a failed RBS stress test. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "By most measures you would still say that bank was probably technically bust. It needs enormous surgery to try and sort it out." Others too expected to go under the knife as the industry grapples with new customer habits. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "These network of branches are turning into a pile of twigs. They're no longer relevant anymore. The technology has bypassed them. Time for a new generation of bank, providing smoother, smarter services, in a different way." After this year, few would argue.

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2016: Europe banks' annus horribilis?

Thursday, December 29, 2016 - 01:39