February 15, 2021 | less than a minute read

Will Europe's Banks Get a Boost From COVID-19 Changes?

Taylor English

COVID-19 is forcing European banks to take long-overdue measures to streamline operations and cut costs. This involves not only slashing staff, but reducing the number of branch locations.

Inertia against change has had to give way to pressure from the European Central Bank (and in the case of Germany's Commerzbank AG, from a large US shareholder). In banking as elsewhere, the way of doing business is changing as more people stay home, voluntarily or not. Banks find that they don't need all those brick-and-mortar locations after all.

Whether these steps will make the banks more competitive with their UK and US counterparts is still an open question.

So far, investors remain skeptical about whether the newfound resolve for cutting will be enough. European bank shares have languished for years. Europe’s largest banks, despite having balance sheets on par with U.S. rivals, trade at a fraction of their market value.