European banking crisis: Why your assets are not safe at your local bank

European banks are not profitable. Your cost-income ratio is 65%. When loans default, things get tight. Learn how to protect your money.

The banking problem in Europe

European banks are not healthy. This is not dramaturgical - it is the mathematical truth that emerges from Huber's data (Figures 21 and 22).

The core problem:

• Negative margins: The ECB key interest rates are below zero. Banks can't make more money
• Zombie loans: Many companies don't pay their debts, but banks don't write them off
• Restructuring provisions: To a large extent, profits are just provisions for future losses
• Balance sheet extension: The ECB ties up balance sheets in bond purchases. Banks have less lending ability

Critical metrics: The cost-income ratio

One key figure shows the problem clearly: the cost-income ratio (CIR). It shows how many cents a bank has to spend to earn one euro.

What does that mean? German banks spend 65 cents to earn one euro. This is not sustainable. US banks have a CIR of 42%. This is the Americans' competitive advantage.

How to protect your money

1. Diversification of banks

Not all money is in one bank. Use:

• Several banks: Deposit insurance works per bank up to €100,000
• Online banks: Digital banks don’t have expensive branches and have better margins
• Non-Eurozone banks: Swiss or Scandinavian banks are more stable

2. Alternative form of assets

Banks are not the only form of wealth:

• Gold and silver physical (do not store in the bank)
• Real Estate Ownership
• Shares in international companies
• Cryptocurrencies (as a small position)

3. Structural reallocation

Huber's thesis recommends: Shift 60% of your assets into tangible assets. No more relying on banks.