Where now for European banks?
Now that the dust surrounding the introduction of euro notes and
coin has settled, a true European single market is beginning to
emerge. Although there are still significant legal and regulatory
differences between the European Union member states, banks are
increasingly aware of the challenge they face to remain competitive
over the next few years.
Examples of successful banking consolidation can be seen at all
levels. At the national level, we have seen the mergers of NatWest
and Royal Bank of Scotland in the UK, BNP and Paribas in France
and Banco Santander and BCH in Spain. The creation of both Fortis
and Nordea has produced strong regional banks in Benelux and the
Nordic countries respectively. Internationally, the merger of JP
Morgan and Chase Manhattan Bank has created a new banking
We have written before of the need for companies to monitor
developments in the European banking sector. There will continue
to be significant changes and further consolidation at all levels is
inevitable - as banking strategies succeed and fail.
Technology will also play its part in this process. New entrants will
compete with banks for parts of their business. In some cases,
those new entrants will see their first mover advantage eroded as
the banks catch up with the technology. In other areas, the new
entrants will be able to carve out a sustainable niche,
notwithstanding the banks' efforts. The independent treasury
management system market is a good example of this.
But these technological improvements will act as a catalyst to the
real changes, the evolution of the banking sector. As Darwin wrote,
'only the fittest will survive'.