Banks forced to retrench Various developments point to the banking sectors in the US and western Europe shrinking. The key question is what might take their place.

Mid-size German companies forced to shift

The backbone of the German economy, the medium-sized businesses in the Mittelstand, are having to find alternatives to bank finance. Most of the biggest companies and the very smallest can still use banks, but the ones in between are finding it difficult and need to issue bonds. Franz Haniel, chairman of the medium-sized conglomerate of the same name, confirms that many middle-size companies are unable to find ready access to the banks. His conglomerate entered the bond market with a €1bn five-year issue in October. This is part of a general trend of bond issues replacing bank loans as banks, hit by balance sheet problems, call in their loans. More...