Banking Mergers and Acquisitions in the EU: Overview, Assessment and Prospects

This paper aims at providing a complete picture of banking mergers and acquisitions (M&As) in Europe during the 1990s and at offering economic evaluation and strategic analyses of the process. The main characteristics of this process in the 1990s were the emergence of " mega banks" at the national scale, a slight increase of cross-border transactions and the emergence of few large pan-European financial groups. Building on an extensive review of the US and EU literature, we examine the impact of M&As in European banking on profitability and efficiency, considering the breakdown between domestic and cross-border transactions. We first proceed with the profitability analysis of distinct completed M&As cases with different industrial strategies (based on the geographical dimension of the transaction and the initial activities of the merging banks). We find that domestic mergers contribute to cut costs for both partners, whereas, for the majority of cases studies, including domestic and cross-border mergers and acquisitions, the impact on profitability is insignificant, but a clear trend to diversify the sources of revenues was apparent. The cost and profit efficiency analysis based on 33 bank-to-bank mergers, confirmed an improvement of cost efficiency and little improvement of profit efficiency for domestic transactions; whereas, no improvement of costefficiency and a little improvement of profit efficiency for cross-border transactions. These results imply that domestic banking mergers in Europe fulfilled their objective to cut costs whereas they failed to achieve revenues synergies; cross-border mergers instead, were proved to better exploit from revenues synergies more likely due to geographical diversification. Against this background, we provide the main prospective scenarios for banking consolidation in the medium term after examining the state of concentration and competition in the domestic banking markets and the role of the regulatory changes and remaining obstacles to a full European banking integration. Finally, we raise the main strategic challenges ahead banking institutions in terms of business models - Universal, multi specialised or specialised banking, optimal size, growth strategies - M&As or partnerships - and the prospects offered by the new Basel capital Accord. A first appraisal suggests: a) a natural coexistence of different business models, each one having its specific characteristics and responding to individual needs, b) the optimal size is not synonym of a larger size and a larger size is not an absolute criterion of profitability and efficiency, c) M&As are not the only alternative to banking consolidation, and d) finally Basel II is redefining the rules of the game to European banking, but it is rather premature to make a final and exhaustive assessment in this respect

Competition from emerging countries, international relocation and their impacts on employment

International relocation has become a topical issue in recent months, in France as elsewhere in Europe. This working paper is a set of four articles. Guillaume Daudin and Sandrine Levasseur provide an assessment of the impact of international relocation on French employment. Georges Pujals deals with offshore outsourcing in the financial sector from a European perspective. Catherine Mathieu and Henri Sterdyniak focus on policy measures taken or to be taken in face of job losses in the French economy. Jean-Luc Gaffard and Michel Quéré show that free competition alone is not optimal for European economies and that a combination of structural and growth oriented macroeconomic policies is needed

Banking Consolidation in the EU: Overview and Prospects. CEPS Reports in Finance and Banking No. 34, 1 May 2004

The banking sector in Europe is at a turning point in its history. This research report provides a complete and up-to-date picture of the consolidation process that took place in the European banking industry during the 1990s and offers a structural, economic and strategic analysis of the sector. The authors also identify new challenges facing supervisory authorities and their likely responses to ensure financial stability

L’Europe bancaire en mouvement… !

The moving European banking system The European banking sector is now evolving. It does not really know where it goes but the general feeling is that it should soon change. The painstaking description of past events and the analysis of European and international banking framework allow to draw some strong trends which would highlight future developments. After presenting principal lessons of past period, this article deals with some challenges and prospects for the European banking future. It analyses with details the national and European « trends » which are sustainable for the European banking consolidation. JEL classification : F36, G21Aujourd’hui, l’Europe bancaire ne sait sans doute pas très précisément là où elle va, mais le sentiment général est que les événements pourraient se précipiter à brève échéance. On peut toutefois, à partir de l’observation minutieuse des faits antérieurs et de l’analyse du paysage bancaire européen et mondial actuel, dégager quelques tendances fortes pour éclairer les évolutions à venir. Dès lors, après avoir exposé les principaux enseignements de la période écoulée, cet article propose quelques perspectives et enjeux pour l’avenir de l’Europe bancaire. En particulier, il examine en détail quelles sont les « trajectoires » nationales et européennes envisageables pour la poursuite de la consolidation du secteur bancaire européen. Classification JEL : F36, G21Pujals Georges. L’Europe bancaire en mouvement… !. In: Revue d'économie financière, n°78, 2005. Les restructurations bancaires européennes. pp. 19-46

Délocalisations et externalisations gagnent la finance européenne

Offshoring and outsourcing gather momentum in the European financial services The main objective of this paper is to investigate what are the facts and implications about offshoring and outsourcing in the financial sector. Offshoring of services has received an enormous amount of attention in the political circles in recent times. Let alone its consequences, offshoring does not appear to be widely understood. Therefore, we thought it would be useful to examine this phenomenon to distinguish facts from exaggerated claims. Given the attractiveness of the phenomenon and the potential implications for competitiveness, there is a need for more analysis on the corporate strategies underlying this trend. In that way, our study will describe the offshoring phenomenon from the financial sector point of view. Although offshoring concern many industries, numerous studies have shown that offshoring and outsourcing scenes are currently dominated by financial services companies. Classification JEL : F23, G2, L23Le sujet des délocalisations s’est une nouvelle fois imposé dans le débat politique récent. Par ailleurs, il apparaît que les termes « délocalisation » et « externalisation » sont souvent utilisés, à tort, de façon interchangeable. Après avoir initialement touché les activités industrielles, ces phénomènes prennent aujourd’hui une dimension nouvelle au fur et à mesure qu’ils affectent des activités à plus forte valeur ajoutée. En raison du manque de données sur l’ampleur des phénomènes étudiés, nous utiliserons les résultats d’enquêtes réalisées par les cabinets de conseil auprès des dirigeants d’entreprises. Bien que conscient des limites de cet exercice, le présent article nous permet d’établir un panorama détaillé de ces deux processus à travers l’étude spécifique de l’industrie des services financiers. En effet, elle a été l’une des plus dynamiques au cours de la période récente. Classification JEL : F23, G2, L23Pujals Georges. Délocalisations et externalisations gagnent la finance européenne. In: Revue d'économie financière, n°90, 2007. Finance et délocalisations, sous la direction de Thierry Walrafen et Charles-Albert Michalet. pp. 117-147

Délocalisations et externalisations dans le secteur financier

The main objective of this paper is to investigate and to establish what are the facts and implications about offshoring and outsourcing in the financial sector. Offshoring of services has received an enormous amount of attention in the political circles in recent times. Let alone its consequences, offshoring does not appear to be widely understood. Therefore, we thought it would be useful to examine this phenomenon to distinguish facts from exaggerated claims. Given the attractiveness of the phenomenon and the potential implications for competitiveness, there is a need for more analysis on the corporate strategies underlying this trend. In that way, our study will describe the offshoring phenomenon from the financial sector point of view. Why this sector? Although offshoring is a trend across all sectors, several consulting studies have shown that offshoring and outsourcing scenes are currently dominated by banks.