In the last few months, several troubling reports have been published and show a gloomy picture of the top banks in the financial services industry.
First, as usual, the European Banking Authority (EBA) published an update of the main risks for the EU financial system. It has been a while now that banks systematically perform poorly on profitability and non-performing loans (click here). Given the current economic situation, it does not necessarily come as a surprise. However, the more problematic news comes from two other reports.
Oxfam published last month a report entitled “Opening the vaults: the use of tax havens by Europe’s biggest banks”, which shows that among the 20 European banks examined in the report, €628 million are declared in tax havens where they employ no staff and €383 million of profits on which they pay no tax at all (click here).
Taken together, these paint an even gloomier picture: even by avoiding taxes, banks remain barely profitable! Which begs the question: what if these banks did pay their taxes as they ought to? Would they even be commercially viable?
To add insult to injury, the EBA also published a report on high earners in EU banks with a disturbing conclusion: “The number of high earners receiving remuneration of more than EUR 1 million increased significantly from 3 865 in 2014 to 5 142 in 2015 […]” (click here). Although this phenomenon is partly explained by the changes in exchange rate between the British Pound and the Euro (since most high earners in the banking sector are in the UK), taken together, it paints a bleak picture of the financial services industry, almost as if they were funding a huge party, using money from tax avoidance, on the sinking Titanic.
Families Europe calls for increased scrutiny of the financial services industry. Tax payers/European families have bailed them out nearly a decade ago and would very much appreciate not having to do it again anytime soon.