It’s Not Just Deutsche. European Banking is Utterly Broken

Jeremy Warner, The Telegraph

A little while back I somewhat unwisely penned a column declaring the financial crisis essentially over. All I meant by this was that with the return of full employment and rising living standards, most of the economic wounds of the crisis had healed, at least in the US and the UK. Yet as is evident from the events of the last week, the banking crisis itself is far from over.

Nine years after the initial eruption, it still rumbles on, with the epicentre now moved from the US to Europe. Only it’s not the same crisis; in large measure, it is completely different. Today’s mayhem is not so much the result of reckless bankers and people asleep at the wheel of regulation, but rather of the public policy response to the last crisis itself – that is to say, regulatory overreach and central bank money printing. All eyes are naturally focused on the specific problems of Deutsche Bank, but Deutsche is in truth no more than the canary in the coal mine.

As Tidjane Thiam, chief executive of Credit Suisse, observed last week, as an entire sector, European banks are still “not really investable”. Much the same disease as afflicts Continental banks also applies to British counterparts, including Royal Bank of Scotland, Barclays and even Lloyds. All are fast being enveloped by a perfect storm of negatives, and this time around, it is substantially the policymakers and law enforcers who are to blame.

The rest of this article can be found at telegraph.co.uk.