Retail or Not Retail - Have European Banks Become More Retail on the Wake of the Crisis?

Posted: 21 Oct 2017

See all articles by Javier Villar Burke

Javier Villar Burke

BBVA Research; Universidade de Santiago de Compostela

Cristina T Plata Garcia

BBVA Research

Date Written: June 1, 2017

Abstract

Retail deposits represent about 30% of total European banking assets. The bulk of the balance sheet of banks (about 70%) comprise non-retail loans and deposits (e.g. interbank loans and deposits, loans and deposits from insurance corporations and pension funds and loans and deposits from non-residents) and other wholesale and investment activities (e.g. holdings of securities, hedging services, issuance of bonds). At country level, there is a clear divide between emerging European countries, where retail loans and deposits represent more than 50% of total assets, and Western European countries, where retail loans and deposits represent less than 30% of total assets.

Within this context of a preponderance of wholesale assets and liabilities, a significant evolution towards a more retail orientation of banks is observed since the outbreak of the crisis. This was mainly achieved through a sustained increase in retail deposits, while the evolution of retail loans was more mixed.This increase in retail deposits implies a substantial shift in the sources of funding used by banks and, therefore, in the own nature of EU banks. Market forces (including changes in investors’ preferences) and new regulation have been the main drivers of such shifts.

Keywords: Retail banking, Bank business models, European Union, Financial System

JEL Classification: G21, M20, M41, E66, G11

Suggested Citation

Villar Burke, Javier and Plata Garcia, Cristina T, Retail or Not Retail - Have European Banks Become More Retail on the Wake of the Crisis? (June 1, 2017). Available at SSRN: https://ssrn.com/abstract=3056289 or http://dx.doi.org/10.2139/ssrn.3056289

Javier Villar Burke (Contact Author)

BBVA Research ( email )

C/ Azul, 4
Madrid, Madrid 28050
Spain

HOME PAGE: http://www.bbvaresearch.com/en/author/javierdelvillar

Universidade de Santiago de Compostela ( email )

Avda. Xoan XXIII
15782 Santiago de Compostela
Spain

Cristina T Plata Garcia

BBVA Research ( email )

C/ Azul,4. 28050, Madrid
Madrid, MADRID 28050
Spain

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