Economics

Europe is over-banked and sector needs to shrink, Nouy says

If not enough weak banks exit the market, profits will be low, there will be less capacity to build up capital buffers and an inclination to take on too much risk to shore up returns, she said.

27.09.2017

Too many banks operate across the 19 nations of the eurozone and the sector must shrink through mergers or failures, Chair of the European Central Bank's Supervisory Board Danièle Nouy said.

Total bank assets in the region are about 280% of gross domestic product compared with 88% of GDP in the US, she said. That's even after the number of banks fell about 20%, to 5,000 since 2008 and the number of bank employees has dropped by around 300,000, to 1.9 million, she said.