2024-07-24 11:44:06
European banks’ profitability ‘peaked’, according to its vice-chairman European Central Bank (ECB), Luis de Guidos, who predicts that a downward trend will follow due to the reduction in interest rates.
“The improvement in European profitability has peaked and we will see it begin to decline as favorable factors such as rising interest rates are limited,” de Guidos warned in an interview with Europa Press.
On the other hand, as a consequence of the ECB’s gradual withdrawal of excess liquidity, banks “will have to compete more to attract deposits”, he added.
“Absolute priority” is the completion of the banking union
Luis de Guidos also emphasizes that for the ECB, the completion of the banking union “is an absolute priority”. He notes, however, that the ECB is not the EU legislator, so what it can do is support the completion of the banking union, the capital market union and also stress the need for an agreement to create a single fiscal capacity in Europe.
“These three elements are necessary to complete the governance of the economic and monetary union”, according to the vice-president of the European Central Bank.
In this regard, he pointed out, the lack of an integrated banking union, with a common deposit guarantee fund, is one of the fundamental reasons that explains the absence of transnational banking operations, in addition to the differences in regulations and national standards, which make a transnational business much more complex than a national one.
“We would like to have a single banking market, and for that we need banks that operate throughout the eurozone,” de Guidos noted.