European Banking Barometer - 2H13

Key findings

EY's European Banking Barometer - 2H13 EY's European Banking Barometer - 2H13 EY's European Banking Barometer - 2H13
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  • Economic confidence reaches two year high
    • For the first time since the launch of EY’s European Banking Barometer a majority of banks are optimistic about the economic outlook.
    • Fifty-six percent of respondents now anticipate the economy in their country improving over the next six months compared to just 25% in 1H13.
    • Respondents in Poland, Spain and the UK were most optimistic, with 86%, 77% and 74% respectively forecasting economic improvement.
    • Despite positive signs of economic recovery across Europe, GDP growth remains too anemic for significant job creation.
  • European sovereign debt crisis is beginning to fade
    • An increasing number of banks also believe the Eurozone sovereign debt crisis is receding following signs that countries at the heart of the crisis are regaining competitiveness.
    • Thirty-five percent of banks now expect the sovereign debt crisis will have a diminished impact on the banking sector in the next six months while just 16% fear an increased impact, compared with 20% and 35% respectively in 1H13.
    • With signs that the sovereign debt crisis is fading is a sign that countries at the heart of the crisis are now regaining competitiveness.
    • Respondents are also increasing optimistic about their own bank’s performance with 60% expecting it to strengthen over the next six months compared to 54% in 1H13.
    • Dutch banks have the most improved outlook about their own bank’s performance and German banks are the most pessimistic.
  • European banks prepare for the Asset Quality Review
    • Despite improving economic indicators, many European banks expect to increase loan loss provisions (LLPs) ahead of the Asset Quality Review.
    • A third of all banks expect to increase loan loss provisions in the next six months, with Spanish and Italian banks anticipating the greatest increase.
    • UK banks, which are not subject to the AQR, generally expect LLPs to decrease.
  • Banks will continue to adjust their footprint in core European markets
    • The reshaping of the banking sector is set to continue.
    • Seventy-three percent anticipate consolidation in the next 12 months, and 86% consolidation within the next three years.
    • The next year will largely see small-scale consolidation, with larger scale activity happening in two to three years, and stronger balance sheets leave banks in a better position to make major acquisitions.
    • Fifty-six percent expect to buy or sell assets, or enter a joint venture in the next six months.
    • Since the crisis, many banks have sold assets as they have restructured their businesses to reduce complexity or raise capital.
    • Although 27% still expect to sell assets, the improving health of the sector means that the emphasis for many banks is shifting from consolidation to growth.
    • Banks remain focused on getting their European footprint right, with 91% anticipating to buy assets and 86% anticipating to sell assets or enter into a joint venture, expect these to occur within Europe.
  • Management focus on regulatory compliance as they prepare for growth in 2014
    • Encouragingly, 50% of banks anticipate launching specific initiatives to promote growth in the next six months.
    • However, regulatory compliance and risk management remain the most important agenda items for European banks.
    • Seventy-three percent stated that preparing for Basel III is now the most important area of focus for them, compared to 54% in 1H13.
    • Tactical cost cutting has fallen from fifth position to eighth for banks in the last six months.
    • Banks are now more focused on strategic cost initiatives such as streamlining processes as they prepare for growth with 45% expecting headcount reductions as processes are streamlined and the sector prepares for growth.
    • The greatest headcount losses are expected in Austria, Poland, Spain and Switzerland, as they go through significant restructuring.

Economic confidence reaches two year high


How do you expect the general economic outlook in your market to change over the next six months?*


EY European Banking Barometer - How do you expect the general economic outlook in your market to change over the next six months?

*Number reflect the mean scores of respondents who answered on a scale of 1 to 5 where 1 denotes 'Worsen significantly' and 5 denotes 'Improve significantly'.

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European sovereign debt crisis is beginning to fade


What level of impact do you think the sovereign debt crisis will have on the banking sector in your market over the next six months compared with the previous six months?*


EY European Banking Barometer - European sovereign debt crisis is beginning to fade

*Numbers reflect the percentage of responds who answered.

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European banks prepare for the Asset Quality Review


Over the next six months, what do you expect your bank’s total provisions against loan losses to do?*


EY European Banking Barometer - Banks continue to  adjust their footprint in core European markets

*Number reflect the mean scores of respondents who answered on a scale of 1 to 5 where 1 denotes 'Decrease significantly' and 5 denotes 'Increase significantly'.

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Banks will continue to adjust their footprint in core European markets


In which markets is our bank likely to buy assets / sell assets / enter a joint venture over the next six months?*


EY European Banking Barometer - Management focus on regulatory compliance as they prepare for growth in 2014

*Numbers represent the number of mentions.
Respondents could state more than one region.

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Management focus on regulatory compliance as they prepare for growth in 2014


Rank the importance of the following agenda items for your organization?*


EY European Banking Barometer - European  banks prepare for the Asset Quality Review

*Respondents were asked to rank the importance of activites on a scale of 0 to 10, where 0 denotes 'Not at all important' and 10 denotes 'very important'. Numbers show the percentage of respondents selecting either 8,9 or 10. Base excludes respondents answering 'Does not apply'.

Reputational risk includes tax transparency. Compliance with capital markets regulations i.e., MiFID II/EMIR. Investing in new customer-facing technology e.g., mobile solutions.

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