Since the global financial crisis, the financial condition of the banking sector has become the hot topic in the European public debate. Stable, strong banks are important both in good economic times as well as in bad ones. In good times, they help to finance enterprises which, in turn, drive economic growth and provide employment. In bad times, unstable banks can pose a threat to the integrity of the financial system and damage the economy. In 2020, the global coronavirus pandemic has put to test the regulations imposed after the financial crash for Europe's banking sector.
The overall number of banks and credit institutions in the European Union decreased to approximately 6 thousand in 2019, from over 8.5 thousand in 2008. A decline in bank branch numbers in Europe has also been noted. The highest share of local population per bank branch was observed in Estonia, with one bank branch providing for approximately 14.5 thousand inhabitants. A decline in branch banking is frequently linked with the growing popularity of new banking methods, such as online or mobile banking. Globally, the adoption rate of different fintech products by consumers has grown rapidly since 2015.
Overall, total assets of banks in Europe have remained fairly stable between 2014 and 2018. The largest bank domiciled on the European market affirmed its strong position in 2018: HSCB Holdings, headquartered in London, claimed 2.2 trillion euros in total assets, confirming its highest ranking on the European market. The scale was balanced by BNP Paribas (headquartered in Paris) and Credit Agricole Group (Paris), ranked second and third, both with over 1.8 trillion euros in total assets.
Ever since the global financial crisis of 2008, Europe’s banks have had a slow and strained journey towards obtaining enough capital to withstand a repeat in the future. As of January 1st, 2015, it became a requirement for banks to hold a minimum of 60 percent in high quality liquid assets (HQLA), which allowed them to survive in times of liquidity stress lasting up to 30 days. This minimum requirement was to increase annually by 10 percent until it reaches 100 percent as of 2019.
In 2019, across Europe, the loan portfolio of banks continued to improve, thanks in part to the growth in loans granted as well as a decline in non-performing loans. European banks also continued a healthy coverage, with the ratio reaching 44.7 percent in the fourth quarter of 2019. Banks also continued an increase in overall profitability, with an average return on equity (RoE) of 5.8 percent as of December 2019. Other metrics that measure the profitability of banks include the cost to income ratio (C/I ratio) as well as return on assets (ROA).
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In the following 7 chapters, you will quickly find the 45 most important statistics relating to "Banking sector in Europe".