Quelle surprise! Europe’s banks continue branch cull

It’s probably not a shock but European banks are continuing to scale back their physical presence across the continent as the digital drive pushes on.

5,900 bank branches were closed last year

The European Banking Federation (EBF) today (11 September) has published “Banking in Europe; the 2018 Facts & Figures”, its annual update on the sector.

The publication shows that the contraction in the European banking sector, both as measured in terms of staff numbers and branches, continued in 2017.

The Banking in Europe overview shows that the total number of credit institutions in the European Union (EU) fell by 5% in 2017 to 6,250 institutions, down by 2,275 since the contraction began in 2009.

Last year’s decline was led by Germany, Italy, Hungary and Austria. The number of credit institutions increased in the UK and Sweden last year.

The number of bank branches in the EU last year declined to approximately 183,000, showing that about 5,900 branches were closed last year, down 3.1%.

Compared to 2007 the total number of branches has declined 21%, or by almost 50,000, reflecting the “rapid uptake of online and mobile banking services in recent years”. In 2017 more than half of all people in the EU, 51%, used internet banking, compared to 29% in 2008.

The number of people working for credit institutions in the EU fell to the lowest level since the European Central Bank (ECB) started measuring this in 1997 and stood at approximately 2.74 million people at the end of 2017, compared to 2.78 million a year earlier.

This compares to 3.13 million in 2009. About two-thirds of all bank staff in the EU is employed by a bank headquartered in one of the five largest EU member states.

You’re special

The EBF says the special theme section in this year’s edition of Banking in Europe is dedicated to non-performing loans (NPLs).

EU NPL stocks declined considerably in recent years due to “enhanced loan selling activities” of banks.

In fact, as of 2017, the ratio for the EU stood at 3.7%, down from an EU-wide peak of 7.5% in 2012 and just below the world average of 3.74%, showing that NPLs are “no longer a specific European problem”.

“European banks are clearly making significant progress on NPLs. Although there is still room for improvement, it should also be clear that the problem no longer is as big as it used to be,” says Gonzalo Gasos, head of banking supervision at the EBF. “The question we now face is whether we really need additional European regulation that forces banks to undersell NPLs and that would leave bank clients worse off.”

In terms of all this data, EBF says it is based on publicly available information from the ECB, the European Commission, Eurostat, the European Banking Authority (EBA), and the EBF and its members.

In addition to the public data, Banking in Europe includes national bank sector data provided through all 32 national banking associations that are members of the EBF.

For the first time, this year’s edition also includes descriptions of national banking sectors by a number of EBF Associate members, including Albania, Andorra, Armenia, Azerbaijan, Bosnia and Herzegovina, The Former Yugoslav Republic of Macedonia, Monaco, Moldova, Montenegro, Serbia and Turkey.