Banking in the New Europe The Impact of the Single European Market Programme and EMU on the European Banking Sector

by Gardener, Edward M. P.; Molyneux, Philip; Moore, Barry

• ISBN13: 9780333964347
• ISBN10: 0333964349
• Format: Hardcover
• Copyright: 2003-01-18
• Publisher: Palgrave Macmillan

Summary

The completion of the European Single Market Programme (SMP) and the launch of "Euroland" are bold statements on the EU and its future. Within this economic process, the particular importance of the banking and financial services sectors is widely emphasized. This collection explores the strategic impact of the Single Market Programme and European Monetary Union on European banks and banking systems. The contributors examine 11 banking systems: Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, and the UK. Thoroughly up-to-date and with a common thematic overview of major trends in European banking systems, this book covers key strategic developments, structural changes, performance trends, and strategies.

Author Biography

Edward P.M. Gardener and Philip Molyneux are both Professors of Banking and Finance, University of Wales, Bango.

Barry Moore is Fellow of Downing College, University of Cambridge.

Table of Contents

List of Tables	xi
List of Figures	xv
Preface	xvii
Synopses of Contributions	xx
Introduction	1	(24)
Barry Moore
Introduction	1	(1)
Author profiles	2	(6)
EMU and retail banking in the EU	8	(13)
Forces for change in European retail banking	9	(6)
The implications of EMU for the structure and competitiveness of retail banking in Europe	15	(3)
The implications of EMU for prices of retail financial products	18	(3)
Concluding remarks and policy implications	21	(4)
Belgium	25	(28)
Rudi Vander Vennet
Market structure and performance	25	(7)
The Belgian banking sector	25	(3)
Ownership structure and privatisation	28	(1)
Market structure and performance	29	(3)
Regulatory framework	32	(8)
Regulatory framework prior to the SMP	32	(1)
Main SMP legislation	33	(7)
Remaining barriers to the SMP	40	(1)
Impact of the SMP	40	(6)
Bank strategies	40	(1)
Mergers and acquisitions	41	(1)
Internationalisation	42	(1)
Prices and margins	43	(1)
Costs and revenues	44	(1)
Efficiency, scale and scope economies	45	(1)
Bank preparations for EMU	46	(4)
The changeover plan during the transition to EMU	46	(1)
EMU challenges for Belgian banks	47	(2)
Banking sector responses	49	(1)
Conclusions	50	(3)
Denmark	53	(29)
Morten Balling
Anders Grosen
Market structure and performance	53	(4)
Size of the banking market 1985-1998	53	(2)
Ownership structure and privatisation	55	(1)
Competition	56	(1)
Banking performance	57	(1)
Regulatory framework	57	(8)
Regulatory framework prior to the SMP	57	(1)
Main SMP legislation	58	(3)
Other domestic regulatory landmarks	61	(4)
Remaining barriers to the SMP	65	(1)
Impact of the SMP	65	(9)
Bank strategies	67	(3)
Internationalisation	70	(2)
Prices and margins	72	(2)
Bank economies	74	(1)
Bank preparations for EMU	74	(8)
The impact of EMU on the Danish banking sector	74	(5)
Scenarios for Danish participation in EMU	79	(1)
Perceived barriers to EMU	79	(1)
Banking sector scenarios in the run-up to EMU and beyond	80	(2)
France	82	(21)
Dominique Plihon
Market structure and performance	82	(6)
Size of the banking market	82	(4)
Ownership structure and privatisation	86	(2)
Competition	88	(1)
Regulatory framework	88	(2)
The French Banking Act 1984	88	(1)
The Financial Activity Modernisation Act 1996	89	(1)
Impact of the SMP	90	(9)
Mergers, acquisitions and alliances	90	(2)
Internationalisation	92	(3)
Costs and revenues	95	(1)
Prices, margins and returns	96	(3)
Bank preparations for EMU	99	(2)
Individual banks' preparations	99	(1)
The Paris financial centre	99	(1)
Continuation of the work of the banking and financial community	100	(1)
Conclusions	101	(2)
Germany	103	(25)
Gunter Lang
Market structure and performance	103	(7)
Size and concentration	103	(2)
Economies of scale and scope	105	(3)
Competition	108	(1)
Banking performance	109	(1)
Regulatory framework	110	(3)
Regulatory framework prior to the SMP	110	(2)
Main SMP legislation	112	(1)
Remaining barriers to the SMP	112	(1)
Impact of the SMP	113	(10)
Bank strategies	113	(3)
Mergers and acquisitions	116	(2)
Internationalisation	118	(1)
Cost changes: scale, efficiency, and input prices	119	(2)
Revenue changes: quantities, prices and margins	121	(2)
Bank preparations for EMU	123	(5)
Effects of EMU on banking activities	123	(2)
Banking sector responses	125	(1)
Banking sector scenarios	126	(2)
Greece	128	(32)
Christos Gortsos
Market structure and performance	128	(14)
Size of the financial market	128	(5)
Ownership structure and privatisation	133	(2)
Competition	135	(4)
Banking performance	139	(3)
Regulatory framework	142	(10)
Regulatory framework prior to the SMP	142	(1)
Main SMP legislation	143	(7)
Other domestic regulatory landmarks	150	(2)
Bank preparations for EMU	152	(8)
Greece as a member state with derogation	152	(1)
Banking sector responses	153	(3)
Banking sector scenarios in the run-up to EMU and beyond	156	(4)
Ireland	160	(26)
Ray Kinsella
Philip Bourke
Introduction	160	(1)
Market structure and performance	161	(10)
Developments in the number of institutions	161	(1)
Branch network	162	(2)
Ownership structure and privatisation	164	(2)
Competition	166	(2)
Market concentration	168	(1)
Banking performance	168	(3)
Regulatory framework	171	(3)
Developments since the Single European Act 1986	171	(1)
Main SMP legislation	171	(2)
Present supervisory structure	173	(1)
Future of the supervisory system	174	(1)
Impact of the SMP	174	(4)
Bank strategies	174	(1)
Mergers and acquisitions	175	(2)
Internationalisation	177	(1)
Prices and margins	177	(1)
Bank preparations for EMU	178	(8)
Introduction	178	(1)
Background	178	(1)
EU regulatory response	179	(1)
EU commercial banking response	180	(1)
Role of the Central Bank of Ireland	181	(1)
Preparations by commercial banks	182	(1)
Prospective impact of EMU on Irish banks	183	(3)
Italy	186	(20)
Franco Bruni
Andreaea Balzarini
Daiele Fox
Efficiency v. profitability	186	(1)
Profitability	187	(1)
Measures of efficiency	188	(2)
Efficiency of Italian banks	190	(2)
International comparisons of efficiency	192	(3)
Relative efficiency of Italian banks 1988-1997	195	(3)
Bank preparations for EMU	198	(8)
Netherlands	206	(24)
Harald A. Benink
Jacques J. Sijben
Introduction	206	(1)
Market structure and performance	206	(6)
Main players and market positions	206	(2)
Competition	208	(2)
Entry barriers	210	(1)
Banking performance	211	(1)
Regulatory framework	212	(2)
Regulatory framework prior to the SMP	212	(1)
Main SMP legislation	212	(1)
Other domestic regulatory landmarks	213	(1)
Remaining barriers to the SMP	214	(1)
Impact of the SMP	214	(3)
Bank strategies	214	(1)
The strategy of ING	215	(1)
Evidence of the SMP's impact	216	(1)
Bank preparations for EMU	217	(10)
Banks as financial intermediaries	218	(2)
A new financial environment	220	(2)
The euro and the capital market	222	(1)
The euro and disintrmediation	223	(2)
The euro and the Dutch banking system	225	(2)
Conclusions	227	(3)
Portugal	230	(23)
Paulo Soares de Pinho
Introduction	230	(1)
Market structure and performance	230	(9)
Recent evolution	230	(4)
Ownership structure and privatisations	234	(3)
Banking performance	237	(2)
Regulatory framework	239	(4)
Regulatory framework prior to the SMP	239	(2)
Main SMP legislation	241	(1)
Remaining barriers to the SMP	242	(1)
Impact of the SMP	243	(5)
Bank strategies	243	(1)
Mergers and acquisitions	244	(1)
Internationalisation	245	(1)
Prices and margins	246	(1)
Costs and efficiency	247	(1)
Bank preparations for EMU	248	(5)
Introduction	248	(1)
Organisational impact	249	(1)
Strategic implications	249	(4)
Spain	253	(35)
Jose M. Pastor
Javier Quesada
Introduction	253	(1)
Market structure and performance	254	(14)
Changes in market size and composition	254	(8)
Emergence of new competitors	262	(1)
Changes in performance	263	(2)
Changes in margins and returns	265	(3)
Regulatory framework	268	(8)
Main deregulation processes	268	(5)
Remaining barriers to the SMP	273	(3)
Impact of the SMP	276	(8)
Bank strategies	276	(1)
Internationalisation	277	(2)
Prices, costs and margins	279	(3)
Efficiency and scale economies	282	(2)
Conclusions	284	(4)
United Kingdom	288	(35)
Edward P.M. Gardener
Philip Molyneux
Market structure	288	(5)
Financial structure	293	(6)
Market concentration and competition	299	(3)
New services and new entrants	302	(7)
Banking performance	309	(5)
Changing regulatory environment	314	(7)
Impact of the SMP	321	(2)
Conclusions	323