European banks struggling to stay above water

Frankfurt

RELIEF that Deutsche Bank AG and Credit Suisse Group AG cleared legal hurdles is likely to soon give way to concern over a bigger problem: European lenders are still struggling to make money.

While the combined US$12.5 billion in settlements the two agreed to pay to resolve US investigations into sales of toxic debt put one dispute behind them, they also highlighted how handicapped their businesses are in generating increased profits - nowhere more than in Italy, which agreed overnight to pump 20 billion euros (S$30 billion) into its banks.

"The settlement is still a blow as the number is large and it will weigh on results for years to come, which will put Deutsche at a …