The CEO of a major European bank offered a stark warning for his industry on Thursday, suggesting that years of accommodative policy by global central banks could quickly turn sour.
Low interest rates have been supportive for the world economy, according to ING Group’s Chief Executive Ralph Hamers, but banks have to be “very cautious” at this moment in time because “this is exactly when things may go wrong,” he said.
“You have to be careful and very cautious not to take too much risk at this moment in time because everything looks so perfect,” he told CNBC on the sidelines of the International Monetary Fund meetings in Washington D.C. on Thursday.
On Wednesday, the International Monetary Fund (IMF) said some of the world’s largest financial institutions could be set to struggle to remain sufficiently profitable in the current economic environment.
The Washington D.C.-based institute listed nine banks likely to struggle with profitability over the coming years including Citigroup, Barclays, Deutsche Bank and a few Japanese lenders. And while the largest Dutch financial services company was not included in the IMF’s list, Hamers admitted he was “worried” by the current climate.