In its latest report on financial stability, the German Bundesbank warns of increasing risks in credit activities.
The volume of bad loans has been growing in banks for three years in a row.
In addition, banks are operating less profitably because of US tariffs that hamper German exports. The Bundesbank suggests that Germany’s big banks, which are specifically overseen by the European Central Bank, are not as stable as they appear, which could pose a problem in the event of a potential crisis or major shock from abroad.
At the same time, the central German banking institution criticized the growing public debt of European countries, which could also destabilize German commercial banks (through the devaluation of risky government bonds), reports SEEbiz. Gone are the days when government bonds were a safe haven. They also reminded that UniCredit, which is preparing to take over Commerzbank, has a large share of Italian government bonds in its balance sheets.
