European Banking After the Euro: Progress and Problems

The introduction of the euro has presented the European banking industry with an opportunity to examine its structure and address its fragmentation. The leaders in European banking will evolve as the efficiencies in a single currency are realized. This article discusses the changes in European banking since the introduction of the euro, providing statistics on mergers and acquisitions and their effects on assets both inside and outside the eurozone. It considers the factors which make cross-border mergers less attractive, the effect of consolidation on costs, and the impact of the euro on foreign exchange earnings, debt markets and cash management systems. It concludes that although banks are becoming more competitive with each other and with other financial services companies, national barriers to further integration of the financial services market remain