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

More documents

Recommendations

Info

5.2.3 Concentration and consolidation 5.2.3.1 United States FDIC figures reveal a decline in the number of credit institutions in the US of the order of 10,327 individual bank and thrift organisations due mainly to unassisted mergers 239 for the period 1985 to 2002 (see table E in table annex as well as graph 5 below). 800 Graph 5: Change in the number of FDIC-insured institutions, 1985 - 2002 600 400 200 0 -200 -400 -600 -800 -1,000 -1,200 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 ■ De Novos ■ Other additions ■ Failures ■ Unassisted mergers ■ Other changes ■■ Net change Source: FDIC Parallel to the number of credit institutions decreasing, industry assets have been increasing. Over the period 1984 to 2003, industry assets more than doubled in nominal terms to $9.1 trillion 240 . From beginning to end of that period, the share of banking assets held by groups of different sizes changed dramatically. While in 1984, credit institutions with more than $10 billion in assets held 42% of the banking industry assets, this share grew to 73% by 2003. Institutions with assets between $1 billion to $10 billion had a 30% share of banking assets in 1984, and only 13% by 2003. Similarly, institutions with assets of $1 billion and less went from holding 28% of industry assets in 1984 to holding only 14% in 2003. 239 Unassisted mergers refer to cases of mergers that occurred in the context of thrift failures. An unassisted merger was a merger encouraged by supervisory authorities between a weak thrift and a healthier thrift but without the financial assistance of the Federal Savings and Loan Insurance Corporation (FSLIC), in contrast to an assisted merger which received the financial assistance of the FSLIC. 240 “The Declining Number of US Banking Organisations: Will the Trend Continue”, January 2004, Federal Deposit Insurance Corporation. 84
Graph 6: Share of US banking industry assets by size group, 1984 and 2003 1984 2003 42% 8% 30% 14% 6% 2% 8% 4% 13% 73% ■ Less than $100 ■ $100 million to $500 million ■ $500 million to $1 billion ■ $1 billion to $10 billion ■ Greater than $10 billion Source: “The declining number of US banking organisations: Will the trend continue”, FDIC study, February 2004. 80% 70% 60% 50% 40% 30% 20% 10% 0% Graph 7 below shows the evolution of asset concentration in the US at the level of the number of institutions for various years between 1980 and 1998. A table from a different source (table H in the table annex) provides asset concentrations for the year 2003. Looking at the asset concentration of the top ten credit institutions by size of assets reveals that they went from holding 18.6% in 1980 to 36.7% of the industry’s assets in 1998 (the numbers associated with graph 7 can be seen in table G in the table annex). Table H in the table annex reveals that the US’s top ten credit institutions by asset size held 46.8% of the industry’s assets in 2003. The top 5 credit institutions by size of assets held 37.6% of the industry’s assets in 2003, while they held 28.6% of domestic deposits. Graph 7: Evolution of the concentration in the US, 1980-1998 (percent of assets) 1980 1985 1990 1995 1998 ■ Top 10 ■ Top 25 ■ Top 50 ■ Top 100 As pointed out above, the decline of the number of credit institutions in the US, as well as the parallel increase in the sector’s concentration, occurred mainly due to M&A activity. The nature of banking consolidation in the US has been both intra-state (within individual states) and inter-state (between states). The Riegle-Neal Act (see regulatory and supervisory comparison chapter of study for more detail on that) is said in particular to have brought about a jump in the number of inter-state mergers, which represented less than five percent of total mergers before the Act, while they represented thirty percent on average in the 1997-2002 period 241 . Note however that the majority of bank M&As in the US are still intra-state. Inter-state expansion has primarily occurred via interstate branching rather than inter-state mergers, as there are still few bank holding companies and/or independent depository institutions with offices in two or more states in the US (so-called multi-state organisations). By 2004 there were 552 multi-state organisations, representing less than 3% of total US credit institutions 242 . In fact, no US institution has major retail operations in all regions of the US 243 . The picture is somewhat different if one looks at the number of inter-state branches (of multi-state credit institutions), as these numbered 28,615 branches 244 in 2004, representing 29% of all branches in the US. This reveals that multi-state credit institutions hold a much high number of branches per credit institution than single-state credit institutions. Source: “Bank Mergers and Banking Structure in the US, 1980-98”, Stephen A. Rhoades, August 2000 - NIC database, Federal Reserve Board. 241 Walter N. (ed), “US vs EU banking market: the more integrated, the more profitable”, November 2003, Deutsche Bank Research. 242 National bank and thrift office data book, Summary of deposits, FDIC, June 2004. 243 Walter N. (ed), “US vs EU banking market: the more integrated, the more profitable”, November 2003, Deutsche Bank Research. 244 This is the number of inter-state branches operated by commercial and savings banks insured by the FDIC. 85
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 12 and 13:
To finish, if we had to pick from a
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 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

Create successful ePaper yourself

Delete template?

Save as template?