European Banks “Not Letting Crisis Go To Waste”
(12 February 2021 – Europe) European banks are implementing the mantra “never let a good crisis go to waste” by cutting staff, shuttering branches and pushing customers to digital platforms.
Commerzbank will cut a third of its domestic staff and almost half of its bricks-and-mortar presence after pressure from shareholder Cerberus Capital Management. Bank mergers under way in Italy and Spain are expected to close thousands of overlapping branches. Business consulting firm Kearney predicts one-quarter of Europe’s 165,000 bank branches will be gone in three years.
In Italy, Intesa Sanpaolo SpA shed 10,000 jobs and hundreds of branches after it merged with a smaller rival last year. CEO Carlo Messina said parts of the strategy were “reset due to the pandemic” as customers moved online, and the combined bank’s annual cost savings rose 37 percent to €700 million.
Banks are one of Europe’s economic weak links, and they have been slow to change. Compared with their US peers, European banks struggle to make enough money to support credit growth. They came into the COVID-19 crisis still digesting a mountain of bad loans from the sovereign-debt crisis since 2010.
“The pandemic, to some extent, has been a catalyst for banks to bite the bullet and start addressing these weaknesses in a more radical way” stated European Central Bank Head of Banking Supervision, Andrea Enria.