Center for Financial Studies (CFS) at the Goethe University Frankfurt
Center for Financial Studies (CFS) at the Goethe University Frankfurt: CFS Financial Center Index maintains its high level
Center for Financial Studies (CFS) at the Goethe University Frankfurt / Key word(s): Miscellaneous CFS Financial Center Index maintains its high level Financial services providers remain optimistic / Banks slightly more hesitant / End to Euro crisis not expected FRANKFURT, 19 April. The business sentiment in Germany’s financial sector continues to be positive. The CFS Financial Center Index stayed flat in the second quarter, gaining a mere 0.1% compared to last quarter’s value (115.9 points vs. 115.8 points). The different groups of participants in the survey (financial institutions and brokerage firms, financial sector service providers, supervisory and academic institutions, connected enterprises) demonstrate diverging trends in the four index components (transaction volume, profits, employment, investments). The situation of the financial sector service providers continues to be very good. Despite falling short of their expectations, they report a further rise by 2.9 points. Especially investments and employment have considerably increased (+7.2 points and +3.9 points). Concerning the next quarter, the outlook is bright, as well (125.5 points expected for Q2 2011 compared to 120.5 points for Q1 2011). The financial institutions, however, are less optimistic. After substantial rise in the last quarter, the figures have slightly (-2.6 points) declined, with revenue going down by 4.2 points, yet investments showing a minor increase. With 111.6 points the expectations for the second quarter are just below the performance of the first quarter (112.3 points). The two other groups – the supervisory and academic institutions and the connected enterprises – have surpassed their expectations by 7.4 points, particularly as investments have risen considerably. In addition, the sentiment about the importance of Germany as an international financial center has weakened significantly (-12.5 points). ‘To a great deal this could be related to both the discussion about the upcoming stock exchange merger and the uncertainty concerning the structure of the German banking sector,’ explains CFS Director Jan Pieter Krahnen. EU resolutions not sufficient In the special survey, the majority of the participants (80 %) continues to believe that the Euro crisis will last beyond 2011 and is yet to be resolved (see Figure 2). However, compared to the previous survey, there has been a substantial change in the thinking on the further course of the crisis: whereas in January an almost equal high percentage of panelists envisaged the crisis to continue or deepen further (40% and 39% respectively), there has now been a shift in sentiment towards continuation (now 54%) and away from crisis deepening (23%). ‘One of the reasons why the financial sector remains cautious could be the lack of credible sanction measures’, explains Krahnen. A majority regards the penalty mechanism as not sufficiently automatic (70%) and as politically not enforceable (65%).
Haircut could affect both banks and the taxpayer When confronted with the question, who would and who should pay in case one of the EU member states is enforcing a haircut on its bonds, the answers from the panelists show considerable differences in their expectations and their personal preferences (see Figure 3). About 2/3 of the panel believe that banks should cover the costs. This applies – albeit to a lesser extent (55%) – also to pension funds, private investors and insurance companies. Only 1 out of 5 respondents was of the opinion that the taxpayer should step in. ‘According to the panelists, banks and other institutional investors should step in to prevent the taxpayer from being shackled with costs,’ explains Krahnen. However, if a haircut would indeed be enforced by an EU member state in distress, the majority of the panelists expects the taxpayer to cover the costs (60%), while only a narrow majority foresees that banks will be making write-offs. According to the panel, pension funds, insurance companies and private investors are least likely to cover the costs (35-40%).
www.financialcenterindex.com – for figures and further information. For any questions, please contact: Florian Hense Tel.: +49 69 798-30090 Josef Schießl Tel.: +49 69 94 41 80 26 End of Corporate News 19.04.2011 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 |
120671 19.04.2011 |