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28 November 2003

ECB: Structural analysis of the EU banking sector

The European Central Bank (ECB) released a second report on structural developments in the EU banking sector, prepared by the Banking Supervision Committee (BSC) of the European System of Central Banks. Overall, banks in the EU have remained robust despite temporary and isolated pressures on liquidity and profits.

With regard to the potential future outlook, internationalisation, consolidation and disintermediation may regain importance in the future if the banking environment improves and if, as expected, the gradual economic recovery proves to be durable. In this case, some unwinding of the concentration on core activities in home markets could be expected.

The main findings of the report can be summarised as follows:


  • Difficult economic and financial conditions in 2002 had an impact on some of the longer-term trends under way in the EU banking sector. In particular, internationalisation, consolidation and disintermediation slowed down.
  • Banks stepped up their cost-saving and efficiency-enhancing efforts, as income streams suffered from the challenging operating environment.
  • Banks also took steps to further improve their risk management procedures with a view to controlling credit and operational risks as well as in response to expected changes in the regulatory capital framework (Basel II).
  • The banking sector remains predominant in financial intermediation in the EU.

    ECB Document

  • © Graham Bishop

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