FRANKFURT:

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.