FRANK­FURT:

The Pak Banker - - FRONT PAGE -

Ger­many's bank­ing sec­tor is fac­ing in­ten­si­fy­ing com­pe­ti­tion that could sig­nif­i­cantly re­duce the sec­tor's earn­ings, re­quir­ing lenders to ad­just their busi­ness mod­els, a top Euro­pean Cen­tral Bank pol­icy maker said on Wed­nes­day. "In­ten­si­fied com­pe­ti­tion within an en­vi­ron­ment of low in­ter­est rates over a longer time pe­riod could markedly re­duce earn­ings in the fu­ture," ECB Ex­ec­u­tive Board mem­ber Yves Mer­sch said. "In the light of lower in­ter­est mar­gins, the tra­di­tional busi­ness mod­els should be put un­der scru­tiny." Mer­sch added that while Ger­many's banks are in a bet­ter po­si­tion than some ri­vals, thanks to Ger­many's solid eco­nomic growth, big banks are hardly record­ing any profit growth, an in­di­ca­tor that costs need to be ad­justed.

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