• Germany's news in English
 
Bundesbank profits stall as eurozone risks grow
Photo: DPA

Bundesbank profits stall as eurozone risks grow

Published: 12 Mar 2013 13:28 GMT+01:00
Updated: 12 Mar 2013 16:02 GMT+01:00

"Even if reform policies are kept to, the necessary adjustments in the crisis countries are still going to take years," the head of the German central bank, Jens Weidmann, told a news conference.

"The growth rates seen before the crisis, which were partially artificially inflated, will not be achievable for a long time," he said.

Weidmann also complained that policymakers in some countries still lacked a clear direction.

"The reform process has stalled in France; in Italy, the elections have cast a question mark over it and the situation in Cyprus is even less clear," he said.

"The crisis is thus not over, despite the calm that has returned to the financial markets in the interim," the central bank chief insisted.

Turning to Germany, Europe's biggest economy which has managed to escape the recession that many neighbours still find themselves in, Weidmann said: "the German economy was still in good shape ... despite the difficulties in many European partner countries."

Nevertheless, the long-running crisis "represents the most significant risk for the economy in Germany," Weidmann warned.

"Only some of the confidence lost as a result of the crisis has been recovered so far," he noted.

As the year progressed, growth could be expected to become stronger, but this would depend on the absence of further shocks to confidence, he argued, insisting that it was up to politicians, not Europe's system of central banks to solve the crisis.

The Bundesbank's net profit for last year rose only slightly from a year earlier, because the central bank had decided to set aside billions of euros more in risk provisions, Weidmann continued.

The bank's 2012 net profit amounted to €664 million, compared with €643 million in 2011.

The entire amount – which is less than half the €1.5 billion that Finance Minister Wolfgang Schaeuble had been hoping for – was transferred to the federal government.

"Despite significantly higher interest income, there was scarcely any rise in the profit owing to a further steep increase in risk provisioning," Weidmann said.

Interest income is a central bank's most important source of income and net interest income rose to €8.3 billion last year from €4.8 billion a year earlier.

"The steep €3.5 billion rise is due mainly to strong balance sheet growth on account of the crisis," Weidmann said.

The central bank boosted its provisions for general risks, including inflation and exchange-rate risks, by €6.7 billion to €14.4 billion, he said, pointing to "further heightened risks stemming from monetary policy operations in the wake of the financial and sovereign debt crisis."

As part of its wide armory of anti-crisis measures, the European Central Bank embarked on a controversial programme, known as SMP, to buy up the sovereign debt of countries hit hardest by the crisis.

Out of a total €208.7 billion worth of bonds acquired, Italian sovereign debt accounted for nearly half or €99 billion.

Spain followed in second place, accounting for €43.7 billion of the bonds bought, Greece for €30.8 billion, Portugal for €21.6 billion and Ireland for €13.6 billion.

Weidmann refused to reveal exactly how much of the Bundesbank's risk provisions covered the bonds bought up under the SMP programme, saying merely it was around "one third".

AFP/mry

The Local (news@thelocal.de)

Your comments about this article

Today's headlines
Xenophobia thrives in shadow of Berlin towers
A demo in Marzahn-Hellersdorf. File photo: DPA

Xenophobia thrives in shadow of Berlin towers

There's little to break the monotony of communist-era apartment blocks stretching across Marzahn-Hellersdorf, an east Berlin satellite district that has gained national notoriety for a spate of anti-foreigner protests. READ  

Ecuador returns German money in oil valley spat
Photo: DPA

Ecuador returns German money in oil valley spat

Ecuador's President Rafael Correa said Saturday that Quito would be giving back about $8.5 million donated by Germany last year, in an environmental row. READ  

German bank sues Ecclestone for €345mn
Photo: DPA

German bank sues Ecclestone for €345mn

German bank BayernLB is seeking €345 million ($423 million) in a lawsuit against Formula One magnate Bernie Ecclestone over the 2006 sale of the sport's rights, according to a report. READ  

Löw aims for Euro 2016 with new-look Germany
Joachim Löw holding the World Cup trophy. File photo: DPA

Löw aims for Euro 2016 with new-look Germany

World Cup winners Germany have suffered something of a hangover since their triumph in Brazil, but coach Joachim Löw is hoping a new-look side can go on to claim more glory at Euro 2016. READ  

T-Mobile to pay $90 mn over US fraud charges
Photo: DPA

T-Mobile to pay $90 mn over US fraud charges

German mobile phone company T-Mobile has agreed to pay at least $90 million to settle US government claims that it bilked customers with bogus charges, US regulators said Friday. READ  

Ethics Council rejects assisted suicide law
Photo: DPA

Ethics Council rejects assisted suicide law

The German Ethics Council said the law should not be changed to permit assisted suicide in a paper published on Friday. READ  

Abandoned themepark needs 14m says Berlin
Swan Lake. An abandoned ride in the Spreewald pleasure park. Photo: DPA

Abandoned themepark needs 14m says Berlin

The iconic ruined themepark in the centre of Berlin - a long-time favourite of hipster adventurers - needs a clean-up costing at least 14 million euros, the Berlin government has revealed. READ  

Police nab Nuremberg station bomb hoaxer
File photo of Nuremberg main station: Shutterstock

Police nab Nuremberg station bomb hoaxer

Officers in Nuremberg arrested a man on Thursday evening after he called in a false bomb threat against the main train station READ  

Opinion
Angela, David...and Nigel
So near...and yet so far Photo: DPA

Angela, David...and Nigel

The rise of UKIP broke up what had been a good 2014 for Cameron and Merkel. READ  

'Dr Death' corpse museum gets go-ahead
Dr Gunther von Hagens. Photo: DPA

'Dr Death' corpse museum gets go-ahead

A Berlin court has said that infamous human taxidermist Gunther von Hagens can open a museum in the capital - over objections from local officials. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Willy Brandt at his inauguration in 1972. Photo: DPA
National
Willy Brandt: the man, the chancellor... the airport?
Dresden skyline and river by night. Photo: DPA
Politics
What does Dresden have against Muslims?
Sponsored Article
Why are these International Baccalaureate students cheering?
Germany's national football team lifts the World Cup trophy
Gallery
Germany's most-Googled words of 2014
National
Why has The Local got a new logo?
Photo: DPA
National
This German was abducted and tortured by the CIA
Culture
10 top tips for partying in Germany
Sponsored Article
Top ten gifts for an expat Christmas
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Culture
Stuff your face with these festive German cookies
Photo: DPA
Culture
What do beer, breakfast cereal and dildos have in common?
Culture
The Local's guide to German Christmas markets
Sponsored Article
Top five quirky Christmas jumpers
Photo: DPA
Culture
Get ready for Christmas like a German. We tell you how.
Photo: DPA
Munich
She did what with her dead mother?
Photo: DPA
National
Germany still paying for crisis fall out
Photo: DPA
Culture
Saxon wurst is the worst, Christmas market declares.
Photo: DPA
Politics
Can 'sorry' ever be enough for the Linke?
Sponsored Article
Shop Christmas gifts at Debenhams international store
Photo: DPA
Berlin
The Local's series on 25 years since the fall of the Berlin Wall
Shutterstock
Sponsored Article
Offer: Unlimited airmiles through December 19th
Photo: DPA
Gallery
See how Berlin has changed in 22 photos
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,168
jobs available
The Local Spain is hiring!
The Local is seeking a new editor for our site in Spain to join our growing team of internationally-minded, driven, ambitious and clued-up journalists.
Details and how to apply
Toytown Germany
Germany's English-speaking crowd