A gloomy outlook for euro area banks from the ECB - which says net profits across the sector fell by 20% in the first quarter. As Kirsty Basset reports, all main sources of income are down, the banks themselves pointing the finger back at the ECB over its policy of ultra-low interest rates.
A gloomy picture for euro area banks- According to the latest data from the European Central Bank. It showed all the main sources of profit for banks - including lending, trading and fees - were down on the year before. Net profit fell 20 per cent year on year to 18 billion euros. Banks have blamed the ECB's policy of ultra-low rates. (SOUNDBITE)(English) SIMON SMITH, MARKET ANALYST, FX PRO SAYING: "The policy environment is certainly not helping the banking environment." The low rates policy is supposed to encourage banks to lend to stimulate Europe's economy, but some warn it's now doing more harm than good. Deutsche Bank CEO John Cryan took aim in German paper Handelsblatt, warning that negative interest rates could destabilise banks in the euro area. And the cost of low interest rates is slowly starting to be passed on too. Several banks in Germany are now charging fees on bank accounts or charging corporate clients a percentage point on large deposits. RBS has become the first lender in Britain to charge big corporate clients to hold deposits with the bank. But could costs eventually be passed on to less wealthy personal customers? (SOUNDBITE)(English) SIMON SMITH, MARKET ANALYST, FX PRO SAYING: "I guess it could happen if the negative rates are pushed even further and if we see that for example in the UK." The ECB has defended its policy, saying banks should focus on cutting costs - and not be so reliant on interest rates.