Banks in Germany are expected to put aside extra funds to be able to tackle a potential spike in defaults if Russia cuts off natural gas supplies, several high-ranking banking officials said, as quoted by Bloomberg.
In case of a complete suspension of Russian gas supplies, Europe’s largest economy is projected to fall into recession and the lenders will be required to bolster corporate loans with more capital, according to BNP Paribas Germany head Lutz Diederichs, as quoted by the media. He echoed comments made by Commerzbank Chief Financial Officer Bettina Orlopp published over the weekend in an interview with the weekly Focus Money.
The senior figures in the financial industry are reportedly concerned about scheduled maintenance at the Nord Stream pipeline, the key gas route connecting Germany with Russia, as several EU officials have cast doubt on the potential resumption of supplies.