The Security–Business Nexus
Edited by Gabriele G.S. Suder
Chapter 10: The Bank Sector
1 Stefano Gori INTRODUCTION The introduction of the euro, the slow but constant abolition of barriers leading to a single European market and the privatization of many ﬁnancial institutions have had a deep impact on merger and acquisition (M&A) activity in European banking. In the past few years, a greater concentration has taken place in this fragmented sector. In 1999 the market share of the top ﬁve banks in Spain was 52 per cent while in 2003 it was 61 per cent, in The Netherlands it increased from 82 per cent to 85 per cent, in France from 42 per cent to 55 per cent and in Italy from 48 per cent to 52 per cent in the same time frame (Puledda, 2003). Even though there has been also some M&A activity in the United Kingdom and in Germany, the banking sector in these two countries is still very fragmented compared to their peers in Europe. The trend toward more concentration has also been encouraged by impressive innovations in information technology and by the diseconomies of scale and of scope in ﬁnancial management caused by excessive fragmentation (De Felice and Revoltella, 2003). The stagnant economic situation and the credit crunch that has hit the banking sector are endangering this new-found dynamism. This is especially true for Germany, where new credit lines are refused and old ones are cut (lending in 2002 reached the lowest level in more than 50 years, as percentage change compared to the previous year,...
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