European lenders are bracing for deeper cost cuts and consolidation after the European Central Bank extended a punishing five-year stretch of negative interest rates.

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No one wins in the rabbit-hole world of negative interest rates

The region's banks were left disappointed by Mario Draghi's last major act as ECB president, in which he last week cut its key deposit rate to minus 0.5 per cent, while also unveiling a new tiering system designed to shield a portion of the deposits lenders keep at the ECB from negative rates.

However, the relief provided by tiering will barely offset the

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