FRANKFURT (dpa-AFX) - The European banking sector showed no signs of easing at the start of the week. With minus 1.2 percent, it was the biggest loser in the Stoxx 600 sector overview. Although it has since recovered somewhat from the crisis at regional banks in the USA in March, it is no longer able to match the highs it reached before.

Meanwhile, in Europe, fears of an even weaker economy are intensifying and with them concerns about possible loan defaults and higher provisions at banks. The increase in interest rates, which is actually positive for financial institutions, is currently taking a back seat in view of the economic slowdown, according to trade sources.

Concerns did not diminish on Monday after the Ifo business climate, the most important leading indicator for Germany. Because the mood in the German economy deteriorated in June even more than analysts had expected.

"A decline had already become apparent, but the fact that it went down so significantly is shocking," explained Jens-Oliver Niklasch, economist at Landesbank Baden-Württemberg (LBBW). His conclusion is sobering: "We are in the middle of a recession. In the second quarter, too, economic output as a whole is likely to decline noticeably. For the time being, an economic recovery is a long way off."

In addition to the general economic concerns that are weighing on the banking sector, Commerzbank is currently facing its own problems, which is why its shares were even weaker than the sector on Monday, falling 2.7 percent. The Frankfurt-based institution has to shoulder further burdens worth millions for its Polish subsidiary mBank. Following the ruling of the European Court of Justice (ECJ) on controversial loans in Swiss francs, mBank set aside the equivalent of a further 342 million euros, according to Commerzbank. This brings the total provisions to 1.7 billion euros.

The fact that Commerzbank nevertheless continues to aim for a significantly higher consolidated profit for 2023 than in the previous year could not bring the share price to its feet. This is because the forecast depends, on the one hand, on the further development of the Swiss franc loans of mBank and, on the other hand, is based on the assumption that there will only be a mild recession in Germany.

At a price of 9.194 euros, Commerzbank shares on Monday morning at times headed for their interim low from May at 9.106 euros. Below that, it would be the lowest level since the end of March.

The downward trend also continued for Deutsche Bank shares, which were down 1.4 percent most recently. Earlier, they had slipped below the nine euro mark for the first time since the end of March./ajx/ag/stw