According to a Gallup poll undertaken in 2013, Europeans are world leaders in distrusting banks. Perhaps understandably, those countries that suffered the most after the 2008 financial crisis were top of the mistrust league. Residents of Cyprus and Spain reported only 11% confidence in banks, the least out of 124 countries surveyed.
Widespread disillusionment amongst Europeans
Among those countries surveyed in 2013, Ireland, Spain and Portugal have since exited their financial bailouts. What is presumably most worrying for financial institutions is that, in Spain at least, we have not seen an uptick in reported confidence in banks in 2014.
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With less than a quarter of the population reporting confidence in their banks in six European Union countries, and 24 of 28 member states reporting confidence lower than the global average of 60%, Gallup suggests that there is evidence of “widespread lack of public trust in financial institutions”. This is cause for concern as the ECB prepares to take on new supervisory responsibilities for eurozone banks this fall.
Confidence as a positive indicator for economic growth
In contrast to Europe, the Indian subcontinent reports high levels of confidence in financial systems. Residents of South Asian countries expressed some of the highest levels of confidence, including Bhutan (96%), Nepal (86%), Sri Lanka (85%) and Bangladesh (85%).
One important example is the reported increase in Indians’ confidence, up from 69% in 2012 to 77% in 2013, which Gallup views as “a boost to that country’s economic stability amid continuing economic concerns over the past year”, and a potentially positive indicator for continued economic growth.
On the other hand, the poll suggests that low European confidence is a bad omen for recovery in the region. With banking troubles rearing their ugly head once more in central and Eastern Europe, Gallup warns of potential problems for recovery in European and worldwide financial markets.
The terms of the Cypriot bailout raised doubts about the security of citizens savings, and the prospect of further levies on savers to pay for bailouts could depress confidence even further.