Financial crisis causes German bank withdrawal from parts of int'l business: study

Financial crisis causes German bank withdrawal from parts of int
# 30 April 2014 19:15 (UTC +04:00)

Baku-APA. The partial withdrawal of German banks from international business since the financial crisis may be permanent in certain areas, said a new study on Wednesday, APA reports quoting Xinhua.

According to the study by the Centre for European Economic Research (ZEW) in cooperation with the Institute for Economic Research and the Institute for Applied Economic Research, the foreign operations of German banks have fallen sharply since the financial crisis.

Alone from 2008 to 2009, the international assets of large German banks decreased by 20 percent, after an increase between 2002 and 2007 by an average of 8 percent annually.

The reasons for this are direct policy interventions in the German banking market, a changing international regulatory environment and changes in risk perception and approach to risk of the banks.

Scientists investigate in their study the internationalization activities of the 92 largest bank holding companies and their foreign subsidiaries and branches before and during the crisis.

The data for the study cover the years from 2002 to 2011 and are taken from the record "external status of German banks" of the German Central Bank.

The study pointed out that the most substantial decline in foreign activities of German banks is the fall of assets held directly abroad, as the assets decreased between 2008 and 2011 by 21 percent, after a steady increase from 2002 to 2008.

Between 2002 and 2011, the number of foreign subsidiaries of German banks decreased by more than 55 percent, while 25 percent of the observed 92 banks withdrew subsidiary banks from the international business even completely.

According to the study, the experts assume that German banks withdrew subsidiary banks in all likelihood for the longer term from foreign business.

However, they consider the decline of branches in international business as well as the decline in direct foreign business rather than of a temporary nature.

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