Given the costs of stricter regulation and the prevailing low-interest-rate environment, remaining profitable poses a challenge to many euro-area banks. Thus, it is essential that banks recognise their weaknesses and do something about them early on. Looking at German banks, this could be achieved by boosting income in fee and commission business and by looking into cost-cutting measures.
There is traditionally a strong branch network in Germany. Streamlining it could reduce costs. Mergers might also make sense for some credit institutions, with the focus in each case being on the sustainability of each business model. 4. Capital markets union – the day after tomorrow?