Policy makers are to blame for European bankers’ woes.

That’s the message from David Folkerts-Landau, Deutsche Bank AG’s head of research and chief economist, who said in a 29-page note on Wednesday that European Central Bank monetary policy decisions and financial regulations are damaging bank profitability.

The ECB’s policy of negative rates has created a “smell of panic” that has eroded confidence among investors and savers while penalizing European banks by about 8 billion euros (US$9 billion) per year, according to the note. European banks have lost two-fifths of their market value since the introduction of negative rates in 2014, while U.S. banks have gained the same amount.

The headwinds pummelling the industry in Europe have led to waves of job cuts and tie-ups, including the potential merger of Deutsche Bank and Commerzbank AG.

“Banks across the euro zone have to cope with an attitude of ‘full speed ahead, damn the torpedoes’ in the implementation of a brand new, strongly pro-cyclical, regulatory and supervisory rulebook,” Folkerts-Landau said. “At this point there should be serious doubts as to whether, under these conditions, European banks will be able to compete internationally with U.S. institutions.”