In Europe, introducing proper recapitalization measures has been challenging due to the political circumstances and constraints of the Eurozone. In contrast to a single country like Japan, 19 member states have to come together in the Eurozone and decide on a particular policy measure.
If the level of interest rates went down by another 100 basis points, profits would fall by 60% – provided the banks adjusted their balance sheets. If interest rates increased, profits would stabilise at a level slightly lower than the level realised in 2014. Given this rather bleak outlook, banks have to act now.