europas banks, especially the german ones, are low income. A worsening economic downturn may overwhelm some institutions. Because then they have to make provisions for their default-prone loans, which goes to the substance in times of diminishing returns.
McKinsey's management consultants sound the alarm in their recent bank report: Banks around the world are not in any ideal shape near the end of the business cycle. Nearly 60 percent of all institutions could not earn their cost of capital, which is the return on equity and debt demanded by investors. They destroy value.
(tToTranslate) McKinsey (t) Deutsche Bank (t) ISIN_DE0005140008 (t) Commerzbank (t) ISIN_DE000CBK1001 (t) ECB (t) Deutsche Bundesbank