STRUCTURE AND ECONOMIC CONTRIBUTION OF THE BANKING SECTOR

The data contained in this publication has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

Due to rounding, figures presented in the charts throughout this document may not sum.



Number of credit institutions

The downward trend in the number of EU-28 credit institutions, which started in 2009, continued in 2018, albeit at a slower pace, with the number falling to 6,088. This marked a decline of 2.6% compared to the previous year and a reduction of 2,437 (-29%), in total, since contraction started, meaning that one out of four credit institutions has disappeared since the financial crisis. Most of the consolidation has occurred within credit institutions, legally incorporated into the reporting country, where the stock has fallen by 33% since 2008. Consolidation in the banking sector continues helping to reduce overcapacity and aiming for enhancing profitability.

The countries that experienced the largest contraction in absolute terms in 2018 were Germany (-48 units), Italy (-38), Austria (-28) and Ireland (-20), according to the ECB., Estonia (+1 unit), Netherlands (+1), Slovakia (+1), Poland (+2), Czech Republic (+4) and the UK (+20) were the countries where the number of credit institutions increased. The number of credit institutions in the EFTA countries remained unchanged at 410 in 2018.


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The rationalisation taking place in the EU banking sector also involves bank branches as the number of branches continues to shrink, falling to about 174,000 by the end of 2018. Compared to the previous year, branches in the EU-28 decreased by 5.6%, or about 10,000 branches, the largest drop since the financial crisis. The number of branches has fallen by 27% since 2008, or by almost 65,000. This trend continues reflecting the increasing use of digital banking by consumers as more than half of EU individuals, 54%, used internet banking in 2018, up from 51% in 2017, and 25% in 2007, when the data series began.The countries that experienced the largest contraction in absolute terms in 2018 were Germany (-2,185 units), Italy (-1,920) and Spain (-1,314). Only Bulgaria added branches (+82units).


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UK data not available since 2014. For calculation matters latest available data has been used

For a number of years, a trend in the establishment of branches has been dominating that of subsidiaries in the EU. At a consolidated bank level, there were 979 foreign bank branches in the EU in 2018, of which 731 were from other EU Member States. The number of bank branches from third countries is relatively stable and shows only marginal growth. Germany is the country with the highest number of foreign branches from other EU Member States, having 92 branches, followed by Spain with 76. The UK is the country with the highest number, 95, of third country branches, more than three times as many as the 29 non-EU countries branches present in Italy.


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The overall number of subsidiaries continued declining for the eleventh consecutive year, falling by 4.4% to 540, the lowest level since 1997. The number of subsidiaries of credit institutions from other EU countries fell by 17 in 2018. The number of non-EU credit institutions’ subsidiaries dropped to 238, down from 289 in 2010, the highest number since 2007.


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Banks have a large stake in society as important job creators, as they employed about 2.7 million people in the European Union by end-2018. This is about 72,000 fewer than in 2017 making a new lowest level since the ECB’s data series began in 1997. Not surprisingly, the countries with the largest number of jobs in this sector are the countries with the largest financial centres in Europe: Germany, France and United Kingdom; followed by Italy and Spain. These five EU economies employ some 67% of the total EU-28 staff employed. Including EFTA countries, the number of staff employed in the banking sector was about 2.8 million.


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Also reflecting a contraction in the banking sector, the average number of inhabitants per bank staff member in the EU Member States rose from 187 in 2017 to 192 in 2018. The average number has risen each year since 2008, when it was 153. Romania is the country with the highest number, 363 inhabitants per bank staff member, while Luxembourg has the lowest number with 23 inhabitants per bank staff.


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Regarding the number of inhabitants per bank branch. At one extreme is Spain, where each branch welcomes an average of 1,783 citizens, while at the other is Estonia where a branch provides services to an average of 14,496 inhabitants. The average number of inhabitants per bank branch in the EU-28 is almost 5,000.


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Banks continue promoting gender equality initiatives aiming to reach gender balance at all levels. Female employees in the top 15 EU banks counted for more than half of the total workforce in 2018. Along with sectors, part of the initiatives is to encourage board seats for female executives; the average (12.9%) in 2018 was still below desired quotas.


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Economic contributionBanking and related financial services activities make a significant contribution to the EU’s economy.  Despite the drop-in bank employment in recent years, about one in every 100 jobs in the EU was a banking job in 2017. In the past decade, between 3% and 4% of the value of compensation of employees and gross value added to the EU economy has come from financial services (excluding insurance and pension activities).However, in addition to the direct contribution of the banking sector to the economy, banks play a fundamental role in the organisation of our economies.


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One of the most fundamental roles of banks is to provide financial intermediation, which means that banks connect borrowers with savers. By raising deposits from households and companies, banks can use those funds to turn them into credit and thereby facilitate new investments, which contribute to further economic growth. As the above chart illustrates, the vast majority of bank loans are provided to non-financial corporations (NFCs) and households. Those figures demonstrate the strong business focus of banks on providing credit to the real economy, namely NFCs.The strong dependence of European economies on banks is further evident in the financing mix of non-financial corporations. For example, in 2018, SMEs received 47% of their financing from bank loans and only 12% from equity ( the latter being raised on the capital markets [Source]). The importance of bank financing is a specific characteristic of the bank-based European economy and can be compared with economies that are more market-based. Ultimately, this distinction of market-based and bank-based economies means that these economies are affected differently by diverse developments. For example, regulation that complicates the access to credit will have a different impact in the EU than the US and vice versa.

Branches and subsidiaries

The rationalisation taking place in the EU banking sector also involves bank branches as the number of branches continues to shrink, falling to about 174,000 by the end of 2018. Compared to the previous year, branches in the EU-28 decreased by 5.6%, or about 10,000 branches, the largest drop since the financial crisis. The number of branches has fallen by 27% since 2008, or by almost 65,000. This trend continues reflecting the increasing use of digital banking by consumers as more than half of EU individuals, 54%, used internet banking in 2018, up from 51% in 2017, and 25% in 2007, when the data series began.

The countries that experienced the largest contraction in absolute terms in 2018 were Germany (-2,185 units), Italy (-1,920) and Spain (-1,314). Only Bulgaria added branches (+82units).

For a number of years, a trend in the establishment of branches has been dominating that of subsidiaries in the EU. At a consolidated bank level, there were 979 foreign bank branches in the EU in 2018, of which 731 were from other EU Member States. The number of bank branches from third countries is relatively stable and shows only marginal growth. Germany is the country with the highest number of foreign branches from other EU Member States, having 92 branches, followed by Spain with 76. The UK is the country with the highest number, 95, of third country branches, more than three times as many as the 29 non-EU countries branches present in Italy.

The overall number of subsidiaries continued declining for the eleventh consecutive year, falling by 4.4% to 540, the lowest level since 1997. The number of subsidiaries of credit institutions from other EU countries fell by 17 in 2018. The number of non-EU credit institutions’ subsidiaries dropped to 238, down from 289 in 2010, the highest number since 2007.

Bank staff

Banks have a large stake in society as important job creators, as they employ 2.7 million people around the European Union. This is about 72,000 fewer than in 2017 making a new lowest level since the ECB’s data series began in 1997. Not surprisingly, the countries with the largest number of jobs in this sector are the countries with the largest financial centres in Europe: Germany, France and United Kingdom; followed by Italy and Spain. These five EU economies employ some 67% of the total EU-28 staff employed. Including EFTA countries, the number of staff employed in the banking sector was about 2.8 million.

Also reflecting a contraction in the banking sector, the average number of inhabitants per bank staff member in the EU Member States rose from 187 in 2017 to 192 in 2018. The average number has risen each year since 2008, when it was 153. Romania is the country with the highest number, 363 inhabitants per bank staff member, while Luxembourg has the lowest number with 23 inhabitants per bank staff.

Regarding the number of inhabitants per bank branch. At one extreme is Spain, where each branch welcomes an average of 1,783 citizens, while at the other is Estonia where a branch provides services to an average of 14,496 inhabitants. The average number of inhabitants per bank branch in the EU-28 is almost 5,000.

Banks continue promoting gender equality initiatives aiming to reach gender balance at all levels. Female employees in the top 15 EU banks counted for more than half of the total workforce in 2018. Along with sectors, part of the initiatives is to encourage board seats for female executives; the average in 2018 was still below desired quotas (12.9%).

Economic contribution

Banking and related financial services activities make a significant contribution to the EU’s economy.  Despite the drop-in bank employment in recent years, about one in every 100 jobs in the EU was a banking job in 2017. In the past decade, between 3% and 4% of the value of compensation of employees and gross value added to the EU economy has come from financial services (excluding insurance and pension activities).

However, in addition to the direct contribution of the banking sector to the economy, banks play a fundamental role in the organisation of our economies.

One of the most fundamental roles of banks is to provide financial intermediation, which means that banks connect borrowers with savers. By raising deposits from households and companies, banks can use those funds to turn them into credit and thereby facilitate new investments, which contribute to further economic growth. As the above chart illustrates, the vast majority of bank loans are provided to non-financial corporations (NFCs) and households. Those figures demonstrate the strong business focus of banks on providing credit to the real economy, namely NFCs.

The strong dependence of European economies on banks is further evident in the financing mix of non-financial corporations. For example, in 2018, SMEs received 47% of their financing from bank loans and only 12% from equity (the latter being raised on the capital marketsas identified in the SAFE report). The importance of bank financing is a specific characteristic of the bank-based European economy and can be compared with economies that are more market-based. Ultimately, this distinction of market-based and bank-based economies means that these economies are affected differently by diverse developments. For example, regulation that complicates the access to credit will have a different impact in the EU than the US and vice versa.

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