LONDON – The eurozone’s second-largest economy has seen a drop in investment in its banking sector, amid growing fears about the country’s credit ratings.
The decline has forced banks to lay off staff and cut back on investment in their own businesses, and in some cases they have begun to sell their assets.
The head of one of Europe’s biggest banks, J.P. Morgan, said the industry has been hit hard by the economic crisis and has had to cut costs.JPMorgan said it had cut spending by 2.3% for the three months to March 31 compared with a year earlier.
The bank said its total headcount has been cut by 10,000 workers since March 2015.
The drop in banking investment in the euro area’s third-largest country, France, was seen as a sign that economic growth will slow this year.
A spokesman for the European Central Bank said it has seen an increase in its own funding from banks in the area.
The ECB said in March it would begin offering credit cards and other goods and services to its customers in the region, where there is less competition.
But the central bank said it could not say whether it is offering the new products to all customers or only those who had previously made deposits in the European region.
In recent months, France has seen growth slow and inflation rise as a result of the eurozone crisis.
It has been struggling to cope with a ballooning deficit of nearly 2% of GDP.
The economy shrank by 0.4% in the third quarter of this year, compared with an estimated 0.6% contraction in the previous quarter.
The government is planning to spend 1.3 billion euros ($1.8 billion) on a package of measures this year to shore up the economy and tackle the eurozone debt crisis, including cutting public sector wages and reducing benefits.