Commerzbank AG said that Germany could face a slump similar to the contraction seen after the 2008 financial crisis if Russia were to cut off gas supplies.
A bellwether for Europe’s largest economy because it caters to Germany’s small and medium-sized companies, Commerzbank said it would expect to set aside another 500 million euros to 600 million euros (US$509 million to US$611 million) for bad loans as a result.
Last week, larger rival Deutsche Bank AG said that it would have to stash an additional 1 billion euros over two years in such a scenario.
Photo: AP
Germany is among the countries most vulnerable to threats of a shutoff because it built up its reliance on cheap Russian fuel over the past decades. German Minister of Economy Robert Habeck has said Russia’s moves risked a collapse of energy markets and has drawn a parallel to the role of Lehman Brothers Holdings Inc in triggering the credit crunch.
For now, corporate clients “are still doing fine,” because they built up liquidity during the COVID-19 pandemic, Commerzbank chief financial officer Bettina Orlopp said in an interview with Bloomberg TV. “If there would be a complete gas stop, which is a likely scenario also still, then we believe we would see a recession in Germany.”
The potential additional provisions outlined by Commerzbank and Deutsche Bank are equivalent to about 20 basis points of their loan books, they said, though Commerzbank assumes government support in its worst-case scenario while Deutsche Bank does not.
“Every day, every week helps because people get prepared, companies get prepared, the government is preparing,” she said. “The third quarter will be relevant, because hopefully we will know even more, but it’s quite a volatile quarter to be expected.”
Commerzbank also said that it faces an increasingly uphill struggle to keep a lid on costs in the coming years because of rampant inflation.
“For this year, we think that we can really manage the inflation headwinds we see on the energy side, but also on the salary side,” Orlopp said. “Next years — 2023, 2024 — the story will be different, becoming more difficult.”
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
LEAK SOURCE? There would be concern over the possibility of tech leaks if TSMC were to form a joint venture to operate Intel’s factories, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday stayed mum after a report said that the chipmaker has pitched chip designers Nvidia Corp, Advanced Micro Devices Inc and Broadcom Inc about taking a stake in a joint venture to operate Intel Corp’s factories. Industry sources told the Central News Agency (CNA) that the possibility of TSMC proposing to operate Intel’s wafer fabs is low, as the Taiwanese chipmaker has always focused on its core business. There is also concern over possible technology leaks if TSMC were to form a joint venture to operate Intel’s factories, Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺)
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
RSS