BERLIN, Oct 2 (Reuters) - German banks should consider ways to boost their profitability such as charging fees and commissions due to the low interest rate environment and it may make sense for some to merge, Bundesbank board member Andreas Dombret said late on Wednesday.
Last month, the European Central Bank cut its main refinancing rate to 0.05 percent and drove the overnight deposit rate deeper into negative territory so banks have to pay more to park funds with it.
Dombret warned that competitive pressures would increase as the market in Europe is becoming more integrated.
"Against this backdrop it's important that banks recognise their weaknesses and take countermeasures in good time," Dombret said in Berlin.
He said German banks should consider cost-saving measures such as thinning out their traditionally dense network of branches. He added that mergers "could make sense for a number of banks".
The ECB is assessing the books of the euro zone's largest banks to try to weed out soured loans and check how the banks would fare under certain shock scenarios, before the central bank takes over as the bloc's banking supervisor in November.
Dombret stressed that the Bundesbank, Germany's central bank, would continue to play a role alongside the ECB in the new European supervision system, adding that monitoring banks on an ongoing basis was the Bundesbank's mandate and this would remain the case. (Reporting by Reinhard Becker; Writing by Michelle Martin; Editing by Bernard Orr)