Impact of the Financial Crisis on Banking Sector

2016 words 9 pages
Impact of the Financial Crisis on Banking Sector
The current financial crisis, which started in the Unites States, has dominated the headlines all around the world since summer 2007. The world has been experiencing one of the most severe crises such as the Great Depression from 1929. This started as a subprime crisis with problems in the subprime mortgage market in the USA in 2007 which spread throughout the world. This subprime turmoil turned soon to a global financial crisis and turnaround to a worldwide recession (Calomiris, 2008). The effect of the financial crisis resulted in problems in the financial systems of many countries. The objective of this paper is to get an overview of the impacts of the current financial crisis on the
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and U.K. since the start of the global financial crisis because all major European countries are integrated with United States in business. In addition, the major Swiss bank UBS was involved in the U.S asset backed securities (subprime exposures) balance sheet. The consequences of U.S. were automatically diverted to European economies. All European banks which were affected from the financial crisis on banking sector are mentioned as follows:
The Unicredit SPA in Italy; ING Group N.V., Rabobank, ABN AMRO Holding N.V. in the Netherlands; Credit Agricole S.A., Societe Generale, Natixis, BNP Paribas and Groupe Caisse d’Epargne in France; Fortis and Dexia S.A. in Belgium; UBS AG and Credit Suisse Group in Switzerland; IKB Deutsche Industriebank AG, Deutsche Bank AG, Bayerishe Landesbank, Landesbank Baden-Württembert, WestLB AG, Dresdner Bank AG, HSH Nordbank AG, DZ Bank AG, Landesbank Scahsen, Commerzbank AG, and Hypo Real Estate Holding AG (Erlend, 2009). Figure 3: Developed Europe: Bank Losses
According to Figure 3 (Q2 2008), all major European countries are cruelly affected from the current financial crisis. Especially, U.K. with a total loss of $61.3 billion, Germany with a total loss of $56 billion, Switzerland with 54.3 billion, France with $25.1 billion, the Netherlands with a total loss of $12.1 billion, Belgium with $10.8 billion, and Italy with a total loss of $2.4 billion. In Germany, for instance, the government-supported Landesbanken are the


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