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State of the banking industry
- Market capitalization of global banking industry almost unchanged
- US banks strengthened leading position regarding valuation
- BRICS institutions with negative TSR performance, increased CDS spreads and rating downgrades (e.g. uncertainty about Crimea crisis in Russia)
Key banking drivers
- Western European economic recovery continued in Q4 2013, but rising concerns about possible deflation
- German and US long-term yields decreased in Q1 2014, leading to flatter yield curves and reduced maturity transformation
- Major Western European banks reported low results for Q4 2013
Special topic: Asset Quality Review (AQR) challenges largest European institutions
- AQR as core element of the ECB‘s comprehensive assessment running since end of February
- Capital gap expected only for few institutions by most market participants
- Not fully disclosed framework for stress testing causes high uncertainty
