Banking sector in Europe
In 2012, the development of the banking sector in Europe was marked by the national debt crisis of the euro countries and calls for systemically relevant banks to raise their equity. The year got off to a good start. By the middle of March, the Stoxx Europe 600 Banks Index in EUR had gained 17 percent. The European Central Bank (ECB) had actively intervened in the market and had assured financial support to countries affected by the crisis. However, as the banking crisis in Spain intensified, the Index lost over 30 percent up to the end of May. The tense situation only stabilized in mid-2012. In June, the EU Commission affirmed its plans to establish a centralised European banking supervisory authority; an agreement on this was reached by the EU finance ministers in mid-December. At the end of July, the eurozone finance ministers had also decided to provide Spain with financial support for the recapitalization of banks. As a result, the Stoxx Europe 600 Banks Index rapidly recovered and by the end of the year increased by 37.4 percent from its low on 4 June 2012.
Banking sector in Liechtenstein and Switzerland
The uncertainties in Europe continued to negatively impact the performance of bank shares in Liechtenstein as well as in Switzerland in 2012 too. In addition, tax disagreements between the USA and Germany weighed heavily on the general situation. In 2012, these problems were compounded by renewed increases in costs resulting from continuing pressure on margins in the cross-border private banking business. Profitability was reduced by near zero interest rates.
A number of banks in Switzerland and Liechtenstein were scarcely able to profit from the overall very positive performance of the stock market in 2012. Eleven bank shares were among the fifty weakest shares listed on the Swiss Performance Index (SPI). The SPI banks reported a return of 14.0 percent in 2012.