FRANKFURT: German Foreign Minister Olaf Scholz on Thursday said it was “a problem” that the country’s big banks had fallen behind their rivals on the global stage, depriving Germany’s export-oriented companies of strong local lending partners.

Big German and European banks have “lost importance in global rankings” in the 10 years since the collapse of US investment giant Lehman Brothers brought the sector to its knees, Scholz told a banking conference in Frankfurt. “I believe it’s a problem for a large economy like Germany’s, and for the European Union, that the banks that are active here don’t have the scale or global reach needed to support the economy.” Germany’s export success, he added, depends on companies being able to compete globally.

“The financial sector and the banks have to be able to accompany them.” The loss of confidence in Germany’s flagship Deutsche Bank and Commerzbank has been obvious from declines in their share prices.

Deutsche now has a market capitalisation of just under 21bn euros, even after raising some 27bn euros in new shares between 2010 and 2017 through several capital increases to shore up its balance sheet and invest in growth.

Published in Dawn, August 31st, 2018