EU banking sector will face difficulty with the euro. Deutsche Bank's takeover of BT highlights problems that lie ahead.
PARIS, Nov. 22—Deutsche Bank AG, the German financial institution
reportedly set to acquire Bankers Trust Corp., is the second-largest, and many say second-most-powerful, bank in Europe.
But these days, that's not saying much. Whether or not it buys Bankers, Deutsche Bank is in for a tough time.
European banking is facing challenges and difficulties that threaten to remake the corporate landscape. In particular, 11 nations -- including Germany -- will converge their national moneys into one starting Jan. 1. The advent of the euro, as the single currency is called, will deprive European banks of revenue from international currency trading.
More important, it will pit bank against bank across national lines.
Eventually, French citizens will be able to obtain loans from Italian banks, Germans from French or Irish banks, and so on. The competition will be heightened and banks will be under pressure to cut costs, close branches and find revenue from new sources -- and new places.
German banks also are suffering from losses due to financial trading in Russia in the wake of the economic crisis there. Frankfurt-based Deutsche reported a $384 million loss from trading in emerging markets in the first nine months of 1998, though its overall profits were up from the previous year. Two-thirds of the trading losses were related to Russia, analysts said.
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