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28th February 2012

E&Y European banking barometer

Ernst & Young have released their latest European Banking Barometer. The barometer drawn from a survey of 500 bankers across 10 European countries identifies many problems the bankers expect to face this year.


The Eurozone countries remain concerned over the Euro-debt crisis and expect arrears to increase further. The banks believe the combination of arrears, higher capital rules and other regulation will affect them directly and indirectly as it will result in lower lending and that in turn will lead to low growth. Banks expect the higher capital rules will result in higher charges to clients and also lower profit for them on the basis that not all of the charges can be passed on.


E&Y found risk management, Basel III and curbing non-essential expenditure are the top three priorities for banks this year, followed by cutting overall costs and streamlining processes. Off-shoring, and developing new markets are at the bottom of banks’ priorities. Big changes such as re-assessing the product line up, restructuring or establishing new business sectors, asset disposals and new remuneration systems are ranked as middling priorities. Elsewhere it is suggested that major restructuring and major changes to strategy are on hold whilst the banks deal with the immediate problems of the day.


Austrian and Spanish bankers feel the most pressure for banks to merge whilst German bankers see this as more a mid-term issue for them. The only country where bankers were unanimously positive about their prospects for the year was Poland.