1. EUROPEAN BANKING
Structural Features And The Consolidation Trend
Deregulation And The Regulatory Environment
Developments In Retailer Financial Services
Private Banking
Corporate And Investment Banking
Technological Developments Affecting European
Banks
Performance In European Banking
3. EUROPEAN BANKING
European banking markets have experienced market changes over
the last decade or so- the number of banks has fallen substantially as a
result of a merger and acquisitions (M&As) wave, and industry
concentration has increased.
7. STRUCTURAL FEATURES
AND THE CONSOLIDATION TREND
Market conditions have undergone extensive changes over recent
years.
8. STRUCTURAL FEATURES
AND THE CONSOLIDATION TREND
In addition, progress in technology, especially phone-based and internet
banking, has enabled financial firms to extend their activities beyond local or
national boundaries and to increase their market share by providing competitive
products to wider markets at a lower price.
9. NUMBER OF BANKS
Technological developments, deregulation at the EU level and the
introduction of the single market for financial services, have all played
their part in restructuring the features of European markets.
10. NUMBER OF BANKS
As Table 13.1 shows, a fall in the number of bankshas been a
shared tendency throughout Europe.
11. NUMBER OF BANKS
Another indicator of the changing features of the banking sector relates to
the distribution of bank branches
13. EMPLOYMENT IN THE BANKING SECTOR
Another factor that may be suggestive of the relative size of the
banking sector is the amount of employment in the banking industry as a
percentage of total employment.
14. M&AS ACTIVITY AND THE CONSOLIDATION TREND
Cross-border consolidation of financial institutions within Europe
has been relatively limited, possibly reflecting efficiency barriers to
operating across borders, including distance; differences in language,
culture, currency, and
15. BANKING SECTOR CONCENTRATION
What’s banking sector concentration got to do with Private
Equity market?
Whether increased concentration in the banking sector should
be welcomed or combated is far from clear. Many observers claim
that a lowered competition may have positive impacts on both the
solvency of individual banks.
16. BANKING SECTOR CONCENTRATION
The current financial crisis has already proven that structural
changes in the Banking sector are quickly carried over the private equity
markets. In particular, banks are no longer as readily willing to supply
debt for LBOs as it has been the case in the previous years.
17. BANKING SECTOR CONCENTRATION
In principle there are two channels through which banking
concentration could be transfered into the buyout market. Relationship
lending is the first channel.
18. BANKING SECTOR CONCENTRATION
The second channel for transferring banking sector changes into the buyout market
is the way how LBO-debt is arranged. In general banks syndicate the LBO financing,
that is, a consortium of usually large banks share the debt.
19. BANKING SECTOR CONCENTRATION
We analyze empirically how the degree of concentration/competition in
the Banking sector affects the structural achievements in the PE market..
We employ data from two sources. Market-level data are taken from the
database of the Centre for Management buyout and Private Equity Research .
20. DIVERSIFICATION
In finance, diversification means reducing risk by investing in a
variety of assets..
Diversification is one of two general techniques for reducing
investment risk. The other is hedging. Diversification relies on the lack
of a tight positive relationship among the assets' returns, and works
even when correlations are near zero or somewhat positive…
It is important to remember that diversification only works
because investment in each individual asset is reduced.
21. DEREGULATION AND THE REGULATORY
ENVIRONMENT
Single European Market For Financial Services
Efficient risk capital markets play a major role in
innovative high-growth SMEs and the creation of
new and sustainable jobs.
The benefits of a Single Market should accrue to all the
users of the market as well as to the European economy at
large.
22. FINANCIAL SERVICES ACTION PLAN
Three strategic objectives;
establishing a single market in wholesale financial services
making retail markets open and secure
strengthening the rules on prudential supervision.
24. DEVELOPMENTS IN RETAIL FINANCIAL SERVICES
The retail financial services industry has become an increasingly
important segment of european banking business.
25. PRIVATE BANKING
The global private banking business is worth around $20 trillion,
of which one third is held offshore assets under manegement have
grown around 6 per cent annually since the mind-1990 and the trend is
likely to continue at this rate to 2010.
26. PRIVATE BANK RANKINGS
THE TEN LARGEST GLOBAL PRİVATE
Rank 10 Company Rank 09 BANKS AS OF DECEMBER 31, 2010 ARE AS
1 JPMorgan 3 FOLLOWS (LISTED BY ASSETS)
2 Goldman Sachs 2 1.BANK OF AMERICA ($1.740 TRILLION)
3 UBS 1 2.UBS ($1.593 TRILLION)
3.MORGAN STANLEY ($1.508 TRILLION)
4 Credit Suisse 6 4.WELLS FARGO ($1.218 TRILLION)
5 HSBC 4 5.CREDIT SUISSE ($775 BILLION)
6.JP MORGAN ($636 BILLION)
6 Citigroup 5
7.ROYAL BANK OF CANADA ($379
7 Pictet 8 BILLION)
8.HSBC ($379 BILLION)
8 Deutsche Bank 7
9.DEUTSCHE BANK ($272 BILLION)
9 Rothschild 11 10.PICTED & CIE ($243 BILLION)
10 BNP Paribas 10
27. PERFORMANCE IN EUROPEAN BANKING
In recent years, the utilization of information technology has been
magnificently increased in service industries, particularly, the banking industry,
which by using Information Technology related products such as internet
banking, electronic payments, security investments, information exchanges
(Berger, 2003), financial organizations can deliver high quality services to client
with less effort.Whitten et al. (2004, .), stated that “information is an
arrangement of people, data, process, and information technology that interact
to collect, process, store and provide as output the information needed to
support an organization,” which indicates that information system is an
arrangements of groups, data, processes and technology that act together to
accumulate, process, store and provide information output needed to enhance
and speed up the process of decision making.
28. PERFORMANCE IN EUROPEAN BANKING
During last decade, high percentage of financial organizations are
frequently utilize computers technology to facilitate provides services;
and that the speed of adoption is expected to grow further as the
technology expands. The introduction of electronic indicates of data
accumulation, accessing and manipulation assisting the process of
banking decision making.In a Bank’s information system, there are
always potentials of crisis which make the bank endure an insufficiency;
thus, advanced information system supported by a superior mechanism
control is required to make certain that an information system has
achieved the required processes. Surprisingly, some literatures defense
the idea of Solow Paradox in concluding that Information Technology
may essentially affect negatively on banks efficiency and may reduce
productivity.
29. PERFORMANCE IN EUROPEAN BANKING
This notion was noted by Solow (1987), "you can see the computer
age everywhere these days, but in the productivity statistics". The
paradox has been defined by E. Turban, et al. (2008) as the “discrepancy
between measures of investment in information technology and
measures of output at the national level.” Since 1970s to the time Solow
was claiming that there was a huge decelerates in growth as the
technologies were becoming ubiquitous.In an article by Shu and
Strassmann (2005), a survey was conducted on 12 banks in the US for
the period of 1989-1997. They noticed that even though Information
Technology has been one of the most essential dynamic factors relating
all efforts, it cannot improve banks’ earnings. However, conversely,
there are many literatures approving the positive impacts of Information
Technology expenses to business value.
30. PERFORMANCE IN EUROPEAN BANKING
Kozak (2005) investigates the influence of the evolution in
Information Technology on the profit and cost effectiveness of the banking
zone during the period of 1992-2003. The study indicates optimistic
relationship among the executed Information Technology and together
productivity and cost savings. Brynjolfsson and Hitt (2000) indicates that
"Information Technology contribute significantly to firm level output."
They determine that Information Technology capital contributes an 81%
marginal increase in output, whereas non Information Technology capital
contributes 6%. Likewise they illustrate that Information System
professionals are more than twice as productive as non- Information System
professionals.Ordinarily, recent literatures showed that the relationship
concerning Information technology and banks’ performance have two
encouraging outcomes. Firstly, Information technology can bring down the
operational costs of the banks (the cost advantage).
31. PERFORMANCE IN EUROPEAN BANKING
For instance, internet technology facilitates and speeds up banks
procedures to accomplish standardized and low value-added transactions
such as bill payments and balance inquiries processes via online
network. Consequently, this technology will helps banks concentrating
their capitals on exceptional, highvalue added transactions such as
personal trust services and investment banking via branches. The second
encouraging outcome is that Information Technology can promote
transactions between customers within the same network (the network
effect) (Farrell and Saloner, 1985; Economides and Salop, 1992). In an
article by Saloner and Shepard (1995), data for United States
commercial banks for the period 1971-1979 was conducted and
illustrated that the interest of network effect is significant in utilizing an
Automated Teller Machines (ATMs). Milne 2006 also encourages the
notnotion of the above authors.The modernization of IT has set the stage
for extraordinary improve in banking procedures throughout the world.
For instance the development of worldwide networks has considerably
decreased the cost of global funds transfer.
32. PERFORMANCE IN EUROPEAN BANKING
The task of Information Technology in the community, restricted and
foreign sector banks is to evaluate and measure the observation of the Bank
Employees towards the Implementation of Information Technology in the Banks
also to assist the awareness and fulfillment of the clients with the banks.
Information Technology has been giving clarification to financial organization to
take care of their accounting and back office requirements. It also facilitates and
speeds up the automation of modern supply controls, such as Automated Teller
Machines, Net Banking, Mobile Banking and the akin to. Since organizational
performance cannot be shaped only by IS applications, other factors such as
business strategies and organizational culture should also be taken into
consideration while measuring the impact.The extent of utilizing banks of
information technology will be measured by the volume of investment in
equipment, and the volume of investment in the software and the use of Internet
Banking, Phone Internet, the number of ATM, the use of Cyber Branch and
Banking via SMS.
The collection of data on a sample study of Jordanian banks in all 15 of the
Banks over a period of five years from 2003-2007 will be collected. Since the
study sample is a group of banks which is the nature of scan data via a set of past
data, appropriate regression model to measure this relationship is the Pooled Data
Regression.
33. CORPORATE BANKING
Corporate finance is the field of finance dealing with
financial decisions that business enterprises make and the tools
and analysis used to make these decisions. The primary goal of
corporate finance is to maximize.
34. INVESTMENT BANKING
Investment banking is a field of bsnking that aids companies in
acquiring funds. In addition to the acquisition of new funds, investment
banking also offers advice for a wide range of transactions a company
might engage in.
Through investment banking, and institution generates funds in two
different ways. They may draw on public funds through the capital
market by selling stock in their company, and they may also seek out
venture capital or private equity in exchange for a stake in their
company.
35. TECHNOLOGICAL DEVELOPMENTS AFFECTING
EUROPEAN BANKS
Technological innovations have transformed most industrial
sectors, especially due to the evolution of information-based
technologies. In case of the banking industry, due to the role of
banks as information-based firms and their role in gathering and
analysing information.
36. TECHNOLOGICAL DEVELOPMENTS AFFECTING
EUROPEAN BANKS
Two main factors can be pinpointed as consequences of
technological innovation.
First, the production function in banking has become more capital-
intensive, given that the share of non-staff costs.
Second, diffusion of information technology is radically transforming
banking delivery channels.
37. TECHNOLOGICAL DEVELOPMENTS AFFECTING
EUROPEAN BANKS
These forces are universal and European banks are well
placed to take advantage to technological advances. Small
banks, however, are not well positioned to develop their own
innovation technology. This is a good thing. They can
choose to implement best-practice systems when they have
been tried and tested by their larger counter parts that have
deeper pockets for investing in research and development
and new innovative technologies.
