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

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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.”

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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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