European Banks in Trouble? Huge Risk of Financial Instability

European Banks in Trouble? Huge Risk of Financial Instability


Wall Street firms warn that the Eurozone banks pose a high risk of financial instability.

Most likely due to the sounding of alarms over Deutsche Bank’s latest fine, Goldman Sachs’ president Gary Cohn called out the Eurozone banks for failing to resolve their balance sheets after the financial crisis.

When speaking at the Institute of International Finance, Cohn said that the US banks were “in the best shape ever”, as reported by the Financial Times.

He then added that, “Other [parts of the world] provided cheap financing to their banks to allow them to earn their way out of the crisis and hoped that asset prices would recover.

“What we are seeing today is that approach isn’t necessarily working.”

Nigel Vought, global head of financial services at PwC, had a few opinions of his own on the European banking sector.

He said: “Banks need to wake up and start to react, because they are an integral part of society, but they don’t have a divine right to be here … All the banks are trying to switch from an interest rate-based model to a fee-based model.”

The International Monetary Fund have also said the European banking sector, particularly Deutsche Bank, is a risk to the world banking system.

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