01 December 2004

EPFSF: Market Integration and the Retail Consumer

Retail Financial Services are not just confined to those offered by banks. Retail financial securities firms offer services ranging from internet based execution only sites to advice based portfolio management. The FSAP brings changes which are likely to reduce cross border barriers. However, the assessment for these and other retail securities firms and services cannot yet be made

It is unlikely that there will be a big rise in cross-border banking, credit activity or the provision of other retail financial services in the next few years in view of the scale of barriers to integration. However over the longer term, the benefits which could accrue to consumers, the industry and Europe more widely are clear. In that light targeted initiatives should be designed to promote consumer choice and competition between providers.

The Final Report by the Expert Group on Banking of May 2004 concludes that there is no pan European retail market yet. It underlines that in spite of the existence of an EU passport, banks have shown a preference to develop their cross-border activities via subsidiaries rather than branches and that direct, ‘physical’ contact remains the predominant means of delivery.

On the other hand, the Report notes that many of the larger financial groups maintain a presence in other countries using both branches and subsidiaries and that even if the number of cross-border mergers and acquisitions has been limited, in some cases they have led to the emergence of regional banking groups, such as in the Benelux and Nordic countries.

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