European banks are in difficult conditions

The biggest European investment banks have very pessimistic outlooks. In their forecasts on profitability the banks inform clients about years of normalisation to reach even satisfactory results.  

On Thursday John Cryan, Deutsche Bank’s Co-Chief Executive, designated two forthcoming years as difficult. The bank plans to cut its staff and renew technologies. It may negatively reflect on financial results. Governors of other banks are also going to perform a restructure.

It even hasn’t passed seven years since the last crisis, as systemically important banks are going to revise their business. Tightening of a financial regulation, called Basel III rules, negatively influenced their opportunities, so they must follow new conditions. As it shows, the banks have low profitability.

On this background Deutsche Bank’s actions are very systematical, as it plans to cut over 35,000 jobs and close certain investment-banking operations in 10 countries.

UniCredit bank plans to cut 12,000 jobs - 9.4% of the full staff. As the bank notices, such actions are based on decision to increase profitability and capitalisation.