Germany is overbanked, too many banks, very little consolidation has taken place,” Carsten Brzeski, chief economist at ING Germany, told CNBC via email on Wednesday.
There are approximately 2,400 separate banks with more than 45,000 branches throughout the country and over 700,000 employees, according to Commercial Banks Guide, an industry website.This increases the cost income ratio for banks, Brzeski explained. Meanwhile, the International Monetary Fund (IMF) warned last May that cost-to-income and leverage remain high in Germany.
“Low profitability reflects structural inefficiencies, persistent crisis legacy issues, provisions for compliance violations, and the need to adjust to the new regulatory environment,” the IMF said in the report last May.
Another problem seems to be the reliance on the shipping industry for many banks.