A comparative analysis of the US and EU retail banking markets - Wsbi

More documents

Recommendations

Info

To finish, if we had to pick from among the various stances catalogued above that which we have attempted ourselves to take in our comparison of the EU and US retail banking markets, we would say that we wrote the study as pragmatists and concluded it as realists. To put it clearly: what we were concerned with here above all was to be as factually accurate as possible. We therefore leave the idealism, cynicism and scepticism for others and would be content if our study would be seen as a solid contribution to an educated debate about what exactly the European Union should attempt to emulate as it devises future financial services policy and what it has to offer itself in the transatlantic debate. The EU/US Retail Banking Forum This study is an update of the document presented on the 30th of May 2006 at a seminar of the EU/US Retail Banking Forum. The focus of the event was to initiate a debate on the challenges of banking regulation and supervision in the US and the EU, and it represented the second gathering of the Forum, which was launched on the occasion of the WSBI/ESBG conference entitled “First EU/US Retail Banking Forum Conference”, in Brussels on the 14th and 15th of November 2005. The EU/US Retail Banking Forum is a WSBI/ESBG initiative open to professionals in the fields of retail banking and financial regulation from all related backgrounds (policy-makers, bankers, advisers, regulators, academics etc.), working in the EU or the US. The aim of the Forum, which represents a platform for the exchange of views, knowledge and opinion, is to promote a better understanding of the systems of retail banking and financial regulation of each market. In so doing, it is hoped that the Forum will contribute usefully to policy-setting in the field of financial regulation. The Second EU/US Retail Banking Forum Conference is taking place in Washington on the 16th and 17th of November 2006. More information on the EU/US Retail Banking Forum can be obtained on the websites of the World Savings Banks Institute and the European Savings Banks Group. 12
1. EXECUTIVE SUMMARY Before looking at the US and EU retail banking markets in an attempt to understand and then compare what is happening on both sides of the Atlantic, one first has to acknowledge that there are important differences between the US and the EU. The United States is one country with one language (spoken by 82 percent of the population as a native language and nearly everyone as a daily language) and one currency, which has existed for more than 200 years. In contrast, the European Union, is an intergovernmental and supranational union of 25 democratic Member States with 20 official languages and 14 currencies, only one of which is common between 12 of those Member States, and which has been in existence for just over 7 years 1 . All these differences aside, it is evident that both markets pursue the same or at least similar objectives, though as we explain below they very often choose different ways and means to meet them. Diversity of players and business models – assuring competition Diversity or pluralism in the banking market has apparently proven to be highly desirable in both the US and the EU. Apart from commercial banks, which are market leaders in both markets, savings banks/thrifts and cooperative banks/ credit unions continue to co-exist and compete, providing American and European consumers with a broad range of financial products and services. The competition that has arisen between credit institutions with such diverse structures and business models has contributed to the satisfaction of clients’ needs and is seemingly effectively meeting customer demand in both markets. Diversity of market participants is achieved in different ways: in the US credit institutions each have their own specific charter (or license to operate) according to bank type, such that commercial banks, thrifts and credit unions represent distinct and specific legal forms. In contrast in the EU, commercial, savings and cooperative banks represent different types of actors which are not tied to any particular charter at the EU level. The specificities of the different institutions are generally rather defined at the national level. One common goal: to preserve the stability of the banking sector In the regulatory and supervisory sphere, the US and the EU pursue very similar objectives: ensure that the banking sector is safe, both at the entity level and at the industry level; protect investors, in particular retail investors; guarantee the integrity of the financial markets; make sure that insurance companies can fulfil their obligations. Two different means to achieve it: regulatory competition (US) versus regulatory level playing field (EU) Differences can be observed however in the strategies applied to achieve these stability objectives. For instance, while European regulators are convinced that a level playing field must be ensured for all firms operating in the EU territory, their US counterparts tend to believe that regulatory competition, i.e. competition between the authorities responsible for regulating and supervising the financial sector, is the most appropriate approach. The roles and powers attributed to regulatory agencies is another good example of the divergent approaches followed in these two parts of the world. This translates into huge differences between the EU and US regulatory and supervisory frameworks. In the US, credit institutions are regulated and supervised by distinct bodies, according to their charter type. In Europe, all credit institutions, irrespective of their legal form, are bound by the same laws and regulations, and are supervised by the same bodies at the national level. 1 While the Euro was launched on the 1st of January 1999 as an electronic currency, it became legal tender on the 1st of January 2002. 13
Page 1: September 2006 RESEARCH A COMPARATI
Page 4 and 5: IE UK FR BE NL LU DK DE SE CZ AT SL
Page 6 and 7: The following WSBI/ESBG committees
Page 8 and 9: 4 Regulation and supervision compar
Page 10 and 11: 6.5 Issues of competition in retail
Page 14 and 15: In the US, credit institutions have
Page 16 and 17: Following the same logic, the EU co
Page 18 and 19: In that context, it is tempting to
Page 21 and 22: 3. INSTITUTIONAL COMPARISON 3.1 Sec
Page 23 and 24: The market share of the US banking
Page 25 and 26: FDIC-insured commercial banks are i
Page 27 and 28: The subsidiary stock institution is
Page 29 and 30: Regulatory reform over the past thi
Page 31 and 32: State credit unions were first exem
Page 33 and 34: There has however been much effort
Page 35 and 36: 3.2.2.2.2.2 Ownership and corporate
Page 37 and 38: Hermann Schulze-Delitzsch and Fried
Page 39 and 40: In contrast, building societies in
Page 41 and 42: The commitment of savings banks is
Page 43 and 44: 4. REGULATION AND SUPERVISION COMPA
Page 45 and 46: In addition, for regulations define
Page 47 and 48: The European Parliament has to be k
Page 49 and 50: In fact, it should be mentioned her
Page 51 and 52: As far as coordination at the feder
Page 53 and 54: Despite the trend towards the estab
Page 55 and 56: Another important factor in the cho
Page 57 and 58: In the European Union, contrary to
Page 59 and 60: Although younger than CESR, both CE
Page 61 and 62: 4.2.5.1.1.1.1 Limitation of the geo
Page 63 and 64:
4.2.5.1.1.3 Recent trend: regulatio
Page 65 and 66:
Another important common feature be
Page 67 and 68:
The best execution rule was first m
Page 69 and 70:
4.3.2.2.4 National Market System ru
Page 71 and 72:
The ISD set a basis for the develop
Page 73:
Best execution rules exist in both
Page 76 and 77:
The decline of savings institutions
Page 78 and 79:
Relative to population, the Europea
Page 80 and 81:
5.2.2 Size of credit institutions 5
Page 82 and 83:
5.2.2.2 European Union In Europe, t
Page 84 and 85:
5.2.3 Concentration and consolidati
Page 86 and 87:
5.2.3.2 European Union Average CR5
Page 88 and 89:
In terms of the nature of consolida
Page 90 and 91:
100% Graph 9: Structure of the asse
Page 92 and 93:
In terms of growth of the volume of
Page 94 and 95:
5.3.2 Efficiency of credit institut
Page 96 and 97:
Table 16: Evolution of the Return o
Page 98 and 99:
Finally, looking at cost-income rat
Page 100 and 101:
9. The last couple of decades have
Page 102 and 103:
102
Page 104 and 105:
Furthermore, the average outstandin
Page 106 and 107:
Under an open-end credit, the credi
Page 108 and 109:
Table 19: Evolution of outstanding
Page 110 and 111:
6.2.1.2.2 Regulatory framework over
Page 112 and 113:
6.2.1.3 Comparison 6.2.1.3.1 Size o
Page 114 and 115:
In terms of market competition, the
Page 116 and 117:
The residential mortgage market in
Page 118 and 119:
Funding by retail deposits represen
Page 120 and 121:
In sharp contrast, the US mortgage
Page 122 and 123:
6.2.3.1.2 Lenders to small business
Page 124 and 125:
The securitisation process requires
Page 126 and 127:
Factoring is also continuously gain
Page 128 and 129:
6.2.3.2.4 Securitisation of small b
Page 130 and 131:
The above fears can hardly be allay
Page 132 and 133:
- ACH credits and debits: the stati
Page 134 and 135:
6.3.2.1.2 Financial intermediaries
Page 136 and 137:
It should be noted that two of the
Page 138 and 139:
Assuming that technology, globalisa
Page 140 and 141:
The report adds: “although it bou
Page 142 and 143:
Graph 19: Use of different distribu
Page 144 and 145:
In terms of funding of the business
Page 146 and 147:
Since then, established banks have
Page 148 and 149:
148
Page 150 and 151:
MoU Memorandum of Understanding OTC
Page 152 and 153:
Annex 2: Statistical appendix Table
Page 154 and 155:
Table F: Share of US banking indust
Page 156 and 157:
Table L: Structure of the liabiliti
Page 158 and 159:
Table R: Number of ATMS in the EU a
Page 160 and 161:
F - Federal Deposit Insurance Corpo
Page 162 and 163:
162
show all

A comparative analysis of the US and EU retail banking markets - Wsbi

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?