Most of the Germany’s largest Landesbanken (public sector banks) are expected to disclose sharp rise in provisions for bad loans, eventhough the nation seems to slowly emerge out of the economic slowdown – reported Financial Times.
It has been reported that BayernLB and Landesbank BadenWürttemberg, the nation’s largest regionally-owned public sector banks, have shown improved results compared to last year. But analysts believe that soaring loan loss provisions are likely to dent their profits and hamper the pace of recovery in the public sector banking system.
HSH Nordbank, LBBW, Bayern and WestLB are among the other Landesbanken, along with some private sector banks, like Deutsche Bank, that are affected by the global financial crisis and have raised their loan loss provisioning recently.
Analysts are of the opinion that the worst is yet to come to nation’s banking and corporate sectors, as their working capital further depletes. In its report, Standard & Poor’s, the credit rating agency, said: These potentially high loan losses mainly reflect the speed and depth of Germany’s worst [post-second world war] recession. We consider there to be a high risk that domestic corporate and private insolvencies will rise to new post-unification highs, potentially in 2010, reported the Daily Mail.
