A cold front is developing for Europe's banking sector

BearingPoint. Institute A cold front is developing for Europe's banking sector ks face losing market share or having to close divisions if they don't reverse the downward spiral of falling profit margins, in the main caused by increased regulation, declining assets, falling income and stagnant costs EUR 326 trillion Overall total assets of 156 leading banks in Europe. Four issues threaten future profitability: Norway EUR 394bn Finland EUR 417bn 1. Increased regulation The trend towards tougher regulation has increased compliance and operating costs UK EUR 1,424bn Sweden 19 Denmark Netherlands Ireland EUR 218bn EUR 7,068bn EUR 688bn 7 4. Operating costs Banks have been EUR 2.060bn unable to reduce * operating costs 2. Declining assets Assets declined by nearly 10% from 2012 to 2013. The smaller the asset base gets, the smaller the opportunity to generate Belgium EUR 908bn EUR 4,195bn Luxembourg EUR 139bn turnover ahd revenues Germany 20 EUR 594bn Austria France EUR 6,967bn EUR 1,867bn 7 Liechtenstein Portugal EUR 40bn Switzerland 12 7 EUR 387bn EUR 2,641bn Spain 13 10 Italy EUR 2,571bn 25 3. Falling income Between 2009 and 2013 Key to map interest income declined by 6.7%, 13.9% and 7.4% for small, medium and large banks, respectively < EUR 99m EUR bn Total bank assets in 2013, per country EUR 100m-999m EUR 1bn-3bn > EUR 3bn Number of leading banks per country Sources: BearingPoint Institute and O The Financial Times Ltd 2015. TheBankerDatabase.com BEIO05-30-BIB -IN --- --