June 10, 2020 / 8:21 AM / a month ago

Germany should make provisions to ensure banks have sufficient capital: OECD

BERLIN (Reuters) - Germany should make provisions to ensure banks have sufficient capital in case of a wave of bankruptcies in Europe’s largest economy caused by the coronavirus crisis, a senior OECD economist said on Wednesday.

“The German corporate sector is very heavily financed through bank loans,” OECD economist Isabell Koske said in an interview.

“Banks are therefore at greater risk of not seeing their loans again in the event of a wave of bankruptcies,” Koske said, adding that German banks in general had relatively low returns and were weakly capitalised.

The OECD said on Wednesday that the global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession.

Reporting by Rene Wagner; Writing by Michael Nienaber; Editing by Michelle Martin

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