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

5. ECONOMIC COMPARISON
5.1 Section introduction
The aim of this section is to provide an economic comparison
of the retail banking markets in the US and the EU, firstly at
the macro, or market, level, and secondly at the level of the
institutions present in both markets.
Thus in the first part, we compare the size of banking
markets, first in terms of asset size, then in terms of the
number of credit institutions and branches. We go on to
look at the size of credit institutions in both markets, and
then complete this first part of the chapter by looking at the
nature and pace of banking consolidation and concentration
in the US and the EU.
In the second part of the chapter, which focuses on the
characteristics of credit institutions, we provide further detail
on the similarities and differences between institutions in
the US and the EU. We first report on their typical balance
sheet structures by looking at their main liabilities and assets
and by looking at loan composition. In the last section of the
chapter, we compare the performance of credit institutions
in the US and the EU by looking at certain key indicators
traditionally used to evaluate bank efficiency: net interest
margin, return on equity and cost-income ratio. We consider
aggregated data for the banking industry in each market,
and compare them with each other.
5.2 Banking markets
5.2.1 Size of banking market
5.2.1.1 United States
5.2.1.1.1 Total assets
At end 2003, the American bank market totalled
$9,685 billion (€8,138 billion) in assets, including all
FDIC insured credit institutions and credit unions.
5.2.1.1.2 Number of institutions
The number of institutions has decreased significantly
in the US in the last couple of decades, a result
mainly of geographic deregulation (see regulation
and supervision comparison for more detail on that).
As can be seen from table 1, by 2003 the US had
18,533 depository institutions, consisting of 7,752
commercial banks, 1,412 savings institutions, and
9,369 credit unions.
The number of depositary institutions in the US fell
by 44% between 1985 and 2003, with a very steady
decline in numbers of around 3% a year every year
for that period. The decline in the number of
commercial banks over the same period was similar
to that of the sector as a whole, with a 46% fall.
Table 1:
Evolution of the number of depository institutions in the US
1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003
Commercial banks 14,402 12,329 9,921 9,510 9,124 8,756 8,563 8,297 8,062 7,870 7,752
Savings institutions 3,612 2,802 2,025 1,919 1,776 1,687 1,639 1,587 1,533 1,466 1,412
Credit unions (CU) 15,045 12,860 11,687 11,392 11,238 10,995 10,628 10,316 9,984 9,688 9,369
Total excl. CU 18,014 15,131 11,946 11,429 10,900 10,443 10,202 9,884 9,595 9,336 9,164
Grand Total 33,059 27,991 23,633 22,821 22,138 21,438 20,830 20,200 19,579 19,024 18,533
Sources: Federal Deposit Insurance Corporation (FDIC): Historical statistics on banking (HSOB);
NCUA (National Credit Union Administration): End of year statistics for federally insured credit unions.
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