Center for Financial Studies (CFS) at the Goethe University Frankfurt
Center for Financial Studies (CFS) at the Goethe University Frankfurt: CFS Financial Center Index decreases
Center for Financial Studies (CFS) at the Goethe University Frankfurt / Key word(s): Miscellaneous 21.07.2011 / 08:30 --------------------------------------------------------------------- Press release CFS Financial Center Index decreases Banks and financial service providers more cautious / Financial sector opposes EU Commission's financial transaction tax FRANKFURT, 20 July. The business climate of the German financial sector has clouded in the second quarter compared to the last quarter. The CFS Financial Center Index has dropped by 2 points. Reaching 113.9 points, the sentiment, however, is still positive on average, while the expectations ('Prediction') for the coming quarter are slightly better than the current business situation ('Performance'). All groups of participants in the survey are affected by the downward trend, albeit to differing degrees. The supervisory and academic institutions and the connected enterprises encounter a considerable contraction of their business (-7.6 points). The sentiment of the financial institutions (the 'nucleus' of the financial sector) decreases to a smaller degree (-0.4 points) and the financial sector service providers lose 1.8 points. Financial sector looses momentum The business situation of the group of financial institutions (111.5 points) has weakened in the last quarter, driven almost exclusively by declining profits (-7.1 points). Revenues, employment figures, and investment have gone down only moderately. The group remains confident expecting revenue to rise by 3.9 points, however, abstains from hiring more staff. The financial sector service providers (121.2 points) have increased the number of staff. Despite falling short of their expectations for their overall business situation, yet again (-5.4 points), they envisage revenue and profits to rise. The outlook is slightly more conservative (122.3 points expected for Q3 2011 compared to 125.5 for Q2 2011), but still on a very high level. The considerably clouded business situation of the two other groups - the supervisory and academic institutions and the connected enterprises (107.4 points) - results from revenue and investment numbers falling substantially. Participants of these groups are more cautious as their overall expectations lie below the current situation, mainly due to weaker prospects for revenue and profits. 'The decline of profits intensifies, while the gap between banks and service providers has also grown. This trend is possibly to be seen in light of regulating measures that are already decided or yet to be passed and that will affect the two groups in very different ways', explains CFS Director Jan Pieter Krahnen. Financial sector not in favor of European financial transaction tax The plan of the European Commission to introduce a financial transaction tax on the European level faces opposition among the participants of the special survey. Especially the financial institutions are against the tax. A majority of the participants (51%) objects the introduction, 22% are indifferent and only 16% are in favor of the European financial transaction tax. The opposition of the financial sector is in line with the widespread expectation that the financial transaction tax will not affect the price volatility of the financial markets. 47% of the respondents do not expect the tax to have any volatility reducing effects, as intended by the EU Commission. Only 15% believe price volatility will go down, however almost the same amount of participants of the survey expect prices to become more volatile (see Figure 2). The survey also shows that those that expect prices to become less volatile as a consequence to the introduction of a European financial transaction tax also propose the tax. Respondents that do not back the tax are mostly - but not exclusively - those that expect price volatility in the financial markets to increase. The panel also opposes the plan of the Commission to use the revenue generated by the financial transaction tax to partly finance the EU budget and, therefore, also provide the EU with some tax autonomy (52%). 18% of the respondents regard this as either neutral or positive. 'The responses show that the arguments in favor of the introduction of a European financial transaction tax have yet to be explained by the authorities. Only a minority are convinced by the argument that financial markets would become less volatile', says Krahnen. www.financialcenterindex.com - for figures and further information. For any questions, please contact: Florian Hense Tel.: +49 69 798-30090 Center for Financial Studies Fax: +49 69 798-30077 Goethe-Universität Frankfurt E-Mail: hense@ifk-cfs.de House of Finance www.finanzplatzindex.de Grüneburgplatz 1, HPF H5 www.financialcenterindex.com 60323 Frankfurt am Main Josef Schießl Tel.: +49 69 94 41 80 26 Frankfurt Main Finance e.V. Fax: +49 69 94 41 80 19 c/o NewMark Finanzkommunikation E-Mail: josef.schiessl@frankfurt- Main Triangel main-finance.com Zum Laurenburger Hof 76 www.frankfurt-main-finance.com 60594 Frankfurt End of financial news --------------------------------------------------------------------- 21.07.2011 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- 132705 21.07.2011
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