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Another twist to European bank restructuring

Santiago Carbó Valverde and Francisco Rodríguez Fernández. SEFO - Funcas May 2016

Thursday 26 May 2016, by Carlos San Juan


The global financial sector faces serious challenges to boost profitability. Restructuring is part of the necessary solution to these challenges, but the extent to which economies of scale will be accompanied by economies of scope is yet to be determined, as a successful combination of traditional and new digital technologies is yet to emerge.

The global financial sector faces serious challenges to boost profitability. Restructuring is part of the necessary solution to these challenges, but the extent to which economies of scale will be accompanied by economies of scope is yet to be determined, as a successful combination of traditional and new digital technologies is yet to emerge.

2016 has been a somewhat difficult year for the European banking sector, with big swings experienced on stock markets. The global financial situation and unprecedented market conditions, with real negative interest rates, are major factors in the current difficulties.

The banking industry worldwide – and the European industry is no exception – is facing a shift in model driven by changing technology, an excessive delay in responding to the need to cut overcapacity, and a grim legacy of losses from the crisis and serious downward pressure on returns.

The response has included widespread branch closures and staff cuts, with Spain having the advantage of having begun an orderly process of change some years ago.

Estimates show there are significant potential cost savings to be made from increasing the average size of financial institutions, but doubts remain as regards economies of scope as it is not yet clear which technologies and services will provide the most advantages.

Attached documents

  • The global financial sector faces serious challenges to boost profitability. Restructuring is part of the necessary solution to these challenges, but the extent to which economies of scale will be accompanied by economies of scope is yet to be determined, as a successful combination of traditional and new digital technologies is yet to emerge.

    2016 has been a somewhat difficult year for the European banking sector, with big swings experienced on stock markets. The global financial situation and unprecedented market conditions, with real negative interest rates, are major factors in the current difficulties.

    The banking industry worldwide – and the European industry is no exception – is facing a shift in model driven by changing technology, an excessive delay in responding to the need to cut overcapacity, and a grim legacy of losses from the crisis and serious downward pressure on returns.

    The response has included widespread branch closures and staff cuts, with Spain having the advantage of having begun an orderly process of change some years ago.

    Estimates show there are significant potential cost savings to be made from increasing the average size of financial institutions, but doubts remain as regards economies of scope as it is not yet clear which technologies and services will provide the most advantages.


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