Germany's top bankers today expressed concern over risks to Europe's largest economy amid growing fears of a loominggas crisis.
Germany relies heavily on Russian gas to power its export-oriented economy.If Moscow ramps up its use of Russian gas during the conflict in Ukraine as an economic weapon against the West, Germany could face a total disruption of Russian gas supplies.
The natural gas issue is one of the reasons inflation has soared to 8%, and another reason it has soared.
Inflation has "enormous disruptive potential", raising the risk of a global recession next year, according to Christian Sein, chief executive of Deutsche Bank.
"I cannot deny that I am concerned about the situation in the next 12 months," he told a conference in Frankfurt.
Bettina Orlopp, chief financial officer at Commerzbank, told the same meeting that the risks to the German economy were as great now as they were during the European debt crisis a decade ago.
Both Germany's largest banks are undertaking major reforms, including layoffs and other cost cuts, to restore sustainable profits, with some success.
But shares of the two banks have been depressed for years, especially as concerns about natural gas supplies have grown recently.
Deutsche bank and Commerzbank each fell about 12% on June 23, the day the German government launched the second of three phases of its energy supply contingency plan.
Shares in both banks have fallen more than 20% over the past month, compared with a fall of just 8.3% for the European Banking Composite Index.
Earlier this year, Deutsche Bank raised its full-year risk reserve guidance due to the war in Ukraine and its impact on the economy.
"We also note an increase in uncertainty about the potential impact of European energy supply risks," the bank said in a statement last week.
The banks' concerns echo those of German industry, which relies on bank financing.
“We are in the midst of a huge energy crisis that has the potential to turn into a huge economic crisis,” Marc Spieker, chief financial officer of German energy supplier E.ON, said at the same time. said at the meeting.
