Press detail

Münster/Frankfurt, August 12th, 2009 – The current financial and economic crisis still leaves deep scars in the European banking world. The largest national banking markets in Germany and Great Britain are particularly affected. By contrast, the bank markets in Spain, Scandinavia and most countries of Central and Eastern Europe are rather stable. In 2008 the profitability of the European banking sector was negative for the first time. Even though the results will improve step-by-step in the next years, the profitability level of the record-setting years of 2005 and 2006 will not be achieved in the medium term. During the crisis, banks with a clear business model were more stable and productive. They distinguish themselves by a consistent specialisation on certain business areas, international diversification as well as sufficient capital resources and therefore can be considered as the actual winners of the crisis. These are the results of the European Banking Study (EBS) 2008 – the only comprehensive and independent study on the European banking sector. Since 1999 zeb/ has issued this study in regular intervals, the EBS 2008 being the sixth update to be released. Data of over 4.700 credit institutions from 36 countries of Western and Eastern Europe has been analysed and the results of the 30 leading European major banks have been surveyed in detail.   

In 2005 and 2006 the European banking sector generated profitabilities of over 18 % – the highest figures since the turn of the millennium. Since then, the annual surplus of the banks in Europe has dropped by 460 billion euros during a period of only two years. For the first time this massive collapse in 2008 resulted in a negative return on equity before taxation of -3.1 % in total. The results differentiate widely on the national level. Germany and Great Britain – among others – close the listing of 2008 with return on equity percentages of -8.3 and -14.6, respectively, as well as cost income ratios of over 90 %. Markets that had to deal with financial crises in the past are, in contrast, considerably more stable and crisis resistant in the current crisis. Thus, banks from Spain and the Scandinavian countries as well as some markets in Central and Eastern Europe still achieve a profitability of over 15 % on average.  Even though a recovery of the revenues in European banking markets is expected in the next years to come, the profitability will only improve gradually. The level of results of the years prior to the crisis will not be reached in the medium term.      

Oliver Rosenthal, Head of Information & Research at zeb/: “The recent crisis has hit the German market especially hard. Germany – in comparison to the other European countries – ranks at the end of the list by profitability and cost income ratios – as has been the case in the past. The gap to the profitable markets of Spain and Scandinavian countries has extended even further.” 

Based on the results of the European Banking Study 2008, banks with a consistent strategic positioning belong to the winners of the banking market. An analysis of the results of 30 European major banks reveals that the significance of a clear business model for the success of a credit bank increases during the crisis. European major banks profit from the commitment in various foreign markets and from international diversification. Furthermore credit institutions should either focus consequently on retail and corporate banking or on investment banking. From the point of view of zeb/, a sustainable success can only be accomplished by choosing one of these two business areas. Institutions that have tried to compensate declining profits in retail / corporate banking by reinforcing activities in a non-core area – for instance investment banking – in the past, rank among the losers of the crisis from a present-day perspective. Especially in a crisis the total shareholder return of banks profits from sufficient capital resources. On the other hand, strategies as leveraging (reduction of share of equity on total assets) used by banks in the recent past lead to high losses. 

Dr. André Ehlerding, Partner at zeb/: “Savings banks and cooperative banks in Germany have mastered the crisis with more stability due to their specialisation on customer banking as well as sufficient capital resources. However, the profitability gap of the German banking market to other countries has increased in total. German banks will have to boost their efforts if they want to achieve a good position in the European banking market.” 

zeb/rolfes.schierenbeck.associates is a management and IT-consulting firm specialising in the financial services sector with twelve offices in Germany, Austria, Switzerland, Poland, the Czech Republic, Ukraine and Hungary. zeb/ has over 650 employees and ranks among the leading consulting firms for banking, insurance and other financial services providers.  

Further information on our company is published in the zeb/Report, available on www.zeb.de or – on request – by mail. 

Contact:

Dr. Anne Täubert
Corporate Communications
Phone:  0251.97128.220
Fax: 0251.97128.110
E-mail: ataeubert@zeb.de