For the denominator the yearly average of total assets is used. Interest margins in the German banking sector have been narrowing steadily over the past decades. Recently, margins have come under pressure as it is diﬃcult for banks to pass negative monetary policy rates on to customer deposits.
Opponents claim that they compress risk sensitivity too much and are obviously no first best. But there is no such a thing as a first best in the difficult art of bank regulation; only reasonable compromises based on experience, often bad; the usual catchphrase to describe compromises involving elements of both complex and simple, rough-and-ready, Frisbee-catching rules is that you need ‘belts and suspenders’.