German banks before the wave of bankruptcy
The coronavirus recession may contribute to many bank failures in Germany. The situation of German entrepreneurs will translate into the situation of banks. In a worst-case scenario, even 100 banks may go bankrupt. Their bankruptcy would have a negative impact on the country’s economy.
The main problem of the German banking sector is low interest rates, which affect profitability. In addition, the fragmented structure is also important, as it lacks strong and very profitable universal banks. The German market is mainly made up of local banks with lower efficiency. These banks are often lagging behind in the use of new technologies.
Consolidation could improve the banking sector. Due to the poor revenues of the banks, they still have to cut costs through mergers and synergy effects, in the form of a reduction in the number of outlets and posts.