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Germany-Bafin warns: ‘Double-digit number of banks will face serious problems’

Financial regulator Bafin sees tough times ahead for German banks. The rapid rise in market rates could cost many small and medium-sized institutions, executive director Raimund Röseler warned in an interview with Handelsblatt. “My guess is that a lower double-digit number of banks will be in serious trouble.”

Brokerages had provided long-term loans at low interest rates but now had to pay more to refinance them, Bafin’s top banking watchdog said. “Not all houses have adequately hedged this risk.”

In addition, Röseler fears that loan defaults could rise more than banks had estimated. “The conditions are there for a perfect storm,” said Röseler. “There are high rates of inflation and rising interest rates.” He also said that further turmoil in financial markets and a recession cannot be ruled out.

Source: Capital

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