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Why we cannot rely on banks to get growth going: Jakobsen
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The latest earnings reports from European banks are a cause of concern when it comes to the getting the economy going, says Saxo Bank’s chief economist, Steen Jakobsen.
According to Jakobsen, banks are one of three important drivers of the economy but many European banks are struggling in the current environment of low interest rates.
They are also challenged by low valuations which hamper their ability to raise capital. And finally, many of them are keen to transition from traditional banking into fintech but are struggling to do so and could easily be caught out by the fast-rising fintech firms.
All of these factors mean that one key driver of growth is not working and that’s something to be worried about, Jakobsen says.
Major banks like UBS and Commerzbank disappointed investors when they released their quarterly results earlier this week.
According to Jakobsen, banks are one of three important drivers of the economy but many European banks are struggling in the current environment of low interest rates.
They are also challenged by low valuations which hamper their ability to raise capital. And finally, many of them are keen to transition from traditional banking into fintech but are struggling to do so and could easily be caught out by the fast-rising fintech firms.
All of these factors mean that one key driver of growth is not working and that’s something to be worried about, Jakobsen says.