Euro zone banks should stop blaming regulators and central banks for their predicament and accept that they are not automatically entitled to a comfortable business environment, Bundesbank board member Andreas Dombret said on Thursday.
Euro zone banks are struggling with waning profits and shrinking margins as low rates, intense competition, outdated business models and a high stock of bad assets take their toll on balance sheets.
Banks and politicians have often blamed the European Central Bank’s negative rates for the lenders’ stress, but Dombret pushed back, even warning critics not to interfere with central bank independence.
“In light of this criticism, it may be time for a friendly reminder that central bank independence is not debatable,” Dombret told a conference in London.
“Calling central bank independence into question, even only implicitly, can confuse markets as well as the public about who is in charge when it comes to monetary policy and supervisory decisions,” he added.
Dombret, a top supervision expert at the German central bank, said supervisors would listen to concerns and should not regulate more than necessary, but would not hold back just because banks were struggling to adjust.
“After all, taxpayers didn’t have an easy ride with banks in the years that followed 2007, either,” he said, referring to taxpayer bailouts of numerous lenders.
Banks should instead get used to low rates and fix their businesses so they can restore investor confidence and compete, even in a low-rate environment, Dombret said.
“It is not the task of central bankers, regulators or policymakers to avert or resolve difficult situations for the banking sector,” Dombret said.
“To put it bluntly, no one can expect a comfortable environment for the financial industry. Nor a certain level of interest rates. Nor a certain market environment. Nor a certain kind or degree of regulation.”
Source: Reuters (Reporting by Balazs Koranyi; Editing by Toby Chopra)