Martin Blessing has added his voice to criticism of the European Central Bank’s rates policy © Bloomberg
Commerzbank could struggle to achieve its profit target this year in the wake of market turmoil that has roiled the banking sector, the chief executive of Germany’s second-largest lender has warned.
Martin Blessing told Commerzbank’s annual shareholder meeting on Wednesday that as a result of the turbulence and the continuing pressure from low interest rates, the first quarter, normally a strong one for banks, “is likely to be considerably weaker”.
Stock and debt markets around the world swung wildly in January and February as concerns about a slowing Chinese economy, a plunging oil price and renewed doubts about the European banking system unsettled investors.
The slow start to the year meant that matching the €1.06bn net profit Commerzbank made in 2015 would become a “considerably more ambitious [undertaking]”, said Mr Blessing, who will be succeeded by Martin Zielke at the end of the month. In February, the bank said that it was aiming for a “slight increase” in net profit in 2016.
Shares in the bank were down 2 per cent at €8.28 on the news.
In recent weeks, politicians in Germany have been queueing up to criticise the policies of the European Central Bank, which has embarked on a massive monetary stimulus programme in an attempt to revive the eurozone’s moribund economy.
The negative interest rates that are central to this policy — the ECB cut the deposit rate to minus 0.4 per cent in March — have hurt savers and put more pressure on banks’ margins and mean that lenders have to pay to park their excess cash at the ECB.
This approach has provoked particular concern in Germany, where the importance of saving is deeply embedded in the national psyche, and where banks are more dependent on interest income than in most other European countries.
Mr Blessing joined the chorus of criticism, describing the situation as “paradoxical”. “So far the central bank hasn’t achieved its goal of persuading banks to provide significantly more credit to the economy. I personally doubt that the latest step will achieve it,” he said.
Although he accepted that the asset purchase scheme had helped calm financial markets, Mr Blessing said the ECB’s measures would have little lasting benefit without structural reforms.
“Among the population and companies, negative rates are causing uncertainty. And they are leading to bad investment decisions,” he warned.
“Overall, therefore, I think that the risks associated with a long-term low-interest rate policy outweigh the benefits. The false incentives associated with this policy will weigh on us for years to come.”
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