EUROPEAN banks are slipping into a terrifying zombie state of decline thanks to the European Central Bank (ECB), a leading investment bank has warned.
Financial firms on the continent are falling victim to a scourge already seen in Japan where firms are considered to be the undead of the world, according to JP Morgan.
Ultra low interest rates inflicted by the ECB have lowered business lending.
And the central bank’s money-printing programme is also hurting earnings.
In fact, firms will face a worrying shortfall of €15billion (£12.7bn) by 2018, JP Morgan found.
Kian Abouhossein, chief analyst at JP Morgan, said: “Our conclusion is that European banks are moving more towards a Japanese standard than a US one.”
Financial institutions in Japan have survived decades of economic stagnation on life support from political and monetary intervention.
Mr Abouhossein said: “Europe has been experiencing a meltdown of bank balance sheets since 2008.”
He also warned that if the banking sector in Europe doesn’t pull itself together soon, then the so-called Japanification could be unstoppable.
Full article: EU’s ZOMBIE banks: ECB is destroying Europe’s finance hubs, warns leading investment bank (Express)