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The Europe Banking Sectors : A Company and Industry Analysis (February 2005)
Mergent, Feb 2005, Pages: 36
This report examines the retail and commercial banking segments of the banking industry in Europe, focusing on the markets in France, Germany, Italy, the Netherlands, Spain and the United Kingdom
Current Environment - Key Points
- Despite difficult macroeconomic conditions and an increase in oil and commodity prices, European banks were resilient in the latter part of 2004
- The annual rate of growth of loans to households rose from 6.6% in the first quarter of 2004, to 7.8% in October 2004 throughout the Euro zone
- For European banks, the main sources of revenue derived from non-interest income, drastic cost- cutting measures and reduced provisioning
- European banks showed a strong improvement in their profitability while trying to strengthen their positions in the first half of 2004
- Industry experts believe liquidity is the main priority for leading banks
- Spanish banks recorded positive performances in mortgage loans and mutual funds in 2004
There was also an increased commercial focus on small, and medium sized enterprises (SMEs)
Industry Profile - Key Points
- At the end of 2003, there were 7,444 banks and 186,009 branch offices in Europe
Germany led the sector with the most banks and branches, 2,450 and 47,351, respectively
- Combined total assets for Europe's leading 17 banks amounted to US$13,257.6 billion in the period of 2003-2004
- Wealth and asset management remain the growth products for major French and German banks
- The new accounting rule, IAS 39 is causing problems for the 7,000 listed financial institutions in Europe
- Basel II, a new set of global capital requirements drawn up by the Basel Committee at the Bank for International Settlements (BIS), is expected to come into effect at the end of 2006, replacing Basel I
Market Trends and Outlook - Key Points
- The level of banking fraud among European banks is rising; in 2004, 2,000 Britons had fallen victim to online fraud
- Despite pending liability for card fraud, European banks are slow to embrace smart-card technology
- It is projected that IT expenditure on branch automation for the whole commercial banking industry in Europe will increase from 6% in 2004 to 8% by 2006, to a total of -7.9 billion (US$10.5 billion)
- Between October 2003 and January 2004, 10,000 financial services jobs were moved offshore and by 2008, a further 200,000 jobs will go offshore
- In recent years, European banks have shifted their interest to new markets in Latin America, Eastern Europe and Southeast Asia
- Although the expansion of the European Union (EU) will generate economic benefits, the industry's overall business outlook remains uncertain and the unfavorable developments in oil markets may endanger growth prospects
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