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The ECB published its annual report on EU banking structures. The report reviews the main structural developments in the EU banking sector in 2006 and until mid-2007. It also contains two topical studies on the liquidity risk management of cross-border banking groups in the EU and the distribution channels in retail banking.
The report states that the consolidation process continued at aggregate level, although at a declining rate. At the same time, intermediation grew at an even higher rate than that of GDP. The decline in the number of credit institutions and the increase in the total assets of the EU banking sector signal the emergence of larger institutions. Concentration in the EU banking sector remained unchanged at the previous year’s level, while showing a wide divergence across Member States. Overall, EU banking markets are still characterised by significant structural differences; nevertheless, the dispersion of many of the structural indicators included in Annex I has been declining over time, indicating that the gap between Member States has been narrowing.
Cross-border banks do not perceive the fragmentation of liquidity risk regulation in the EU as imposing undue restrictions on the cross-border management of intra-group liquidity. Other regulations highlighted by banks pertain to the home/host arrangements and the large exposures limits. Moreover, they still identify certain obstacles regarding the pooling of liquidity and the cross-border use of collateral.
The study on distribution channels in retail banking identified that branches are being redesigned in terms of location and services in order to become more cost-efficient and better integrated into the new distribution channels used by banks. Also, banks are increasing their cooperation with third parties, such as retailers, financial companies and financial agents/services groups.