In addition, competitive pressure is high due to the sheer number of institutions in the marketplace, and this will no doubt increase as the integration of the banking market across Europe deepens.
Last but not least, the implementation of the new banking rules will come at a cost – to raise fresh capital, say, or to draw up recovery plans and build up a restructuring fund. Against this backdrop, it is essential that German credit institutions recognise their weaknesses and counteract them at an early stage.