Directorate-General for Internal Policies Directorate A - Economic and Scientific Policy Policy Department A.: Economic and Scientific Policy and Quality of Life Unit Cross-Border Financial Institutions in the EU: Analysis of Total Assets and Ultimate Ownership Briefing Note IP/A/ECON/NT/2008-10 PE 408.550 Only published in English. Author: Josina KAMERLING Policy Department Economy and Science DG Internal Policies European Parliament Rue Wiertz 60 - ATR 00L046 B-1047 Brussels Tel: +32 (0)2 283 27 86 Fax: +32(0)2 284 69 29 E-mail: [email protected] Arttu MAKIPAA Policy Department Economy and Science DG Internal Policies European Parliament Rue Wiertz 60 - ATR 00L042 B-1047 Brussels Tel: +32 (0)2 283 26 20 Fax: +32(0)2 284 69 29 E-mail: [email protected] Manuscript completed in August 2008. The opinions expressed in this document do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised provided the source is acknowledged and the publisher is given prior notice and receives a copy. Rue Wiertz – B-1047 Bruxelles - 32/2.284.43.74 Fax: 32/2.284.68.05 Palais de l‘Europe – F-67000 Strasbourg - 33/3.88.17.25.56 Fax: 33/3.88.36.92.14 E-mail: [email protected] IP/A/ECON/NT/2008-10 PE 408.550 Table of Contents 1. The Data on Financial Institutions in EU27 ......................................................................1 2. Largest Financial Institutions in Europe (Tables 1-5) .......................................................2 3. Cross-border banking groups: country analysis.................................................................4 Tables and Annexes (attached) Table 1: The largest 100 financial institutions in the EU 27.....................................................7 Table 2: The largest 120 banking groups in the EU 27.............................................................9 Table 3: The largest 20 insurance groups in the EU 27...........................................................12 Table 4: The largest 14 foreign banking groups in the EU 27.................................................13 Table 5: The financial institutions with a presence in most member states.............................14 Table 6: Country ranking per total assets and market share/concentration .............................16 Table 7: Country ranking per foreign ownership......................................................................17 Table 8: BNP and RBS case studies.........................................................................................18 Figure 1: Distribution of biggest 100 cross-border financial institution assets in Member St...19 Figure 2: Distribution of biggest 120 cross-border banks assets in Member States...................20 Annex I: Top 10 financial institutions in each EU27 Member State..........................................21 Annex II: Footnotes......................................................................................................................27 IP/A/ECON/NT/2008-10 PE 408.550 1. The Data on Financial Institutions in EU27 The ECON Committee requested information and in-depth analysis of cross-border activity and systemic presence of the top 100 largest financial groups in the EU. In the tables and annexes attached we have assembled both a differentiated presentation of the largest groups within EU 27 (Tables 1-5) as well as more country-specific analysis (Tables 6-8, Annex I). The following comments regarding the data need to be kept in mind: • As to further proceedings in addition to the following, we can always provide the Committee with more in-depth comparisons should this be required. The database is now set-up and contains information on approximately 7600 financial institutions in Europe, all active bank and insurance groups in EU 27. • Certain aspects of the initial request could not be fulfilled as such. This is due to the fact that the data does not allow for a split of retail and wholesale activity in banking. • We have researched several sources in order to obtain the tables and annexes attached. There are different databases that regroup the information on companies worldwide. There is only one company that regroups the access to these databases and could offer an overview, namely Bureau van Dijk Publishing (www.bvdep.com). This company is used by the ECB and the Commission for their figures. For copyright reasons we had to have direct access to the company. We were provided with access to their Orbis database which regroups all companies worldwide. • We have ranked the groups by total assets, as it would have been distorting to use market capitalisation due to the fact that some groups list part of their activities only. We have ranked the groups by their global ultimate holding wherever possible; there are some exceptions, most notably where the ultimate holding group was very much smaller than the institution itself. • The main criterium in the search was the so called "ultimate owner". The ultimate owner (UO) is an institution which ultimately holds the majority stake in another institution. The UO in our definition is a) an independent entity, b) has at least (direct or indirect) 25% in a subsidiary, c) no other entity has a bigger share. The UO can be domestic and/or global, i.e. an institution can be ultimately owned domestically by one other institution, which then can be owned by another one globally. When this briefing talks of "presence in a member state", it means a "ultimate ownership presence". • In order to avoid double counting we have eliminated banks or insurance companies where their holding is in the list (e.g. Fortis Bank is eliminated in favour of Fortis Group). There are exceptional cases where the holding is so much smaller in terms of assets that we have kept all names. • We have taken out of the ranking all central banks but left in state owned banks. • According to our definition, a company is a cross-border institution in the EU when it has an ultimate ownership presence in at least 3 member states. • The figures are for the year 2007, therefore ABN AMRO is not yet consolidated into the Fortis group, although we do show the ultimate owner. • The dataset consolidated all variables in US dollars. In all tables, we have converted the US dollars to euros using the average annual exchange rate for the year 2007 as calculated by the ECB (1,3705 USD/EUR). IP/A/ECON/NT/2008-10 Page 1 of 27 PE 408.550 2. Largest Financial Institutions in Europe (Tables 1-5) Table 1 shows the largest 100 financial institutions in the EU 27, ranked by their total assets (columns 5 and 6) in 2007. This includes both banking and insurance (column 10 for type of institution). Column 3 shows in how many member states within the EU27 a institution has a presence, including the country of incorporation in the EU (Column 4). Columns 7-9 give information on the global ultimate owner of the institution, in case this is different to the institution itself. A differing global ultimate ownership is mostly the case with non-EU based banks (e.g. US banks), but also with state-owned banks. There are some exceptions, e.g. when the ultimate owner is a holding which is itself not a financial institution (e.g. Deutsche Post AG), or when it is a company smaller than the financial institution itself. ABN Amro, ranked 10, finally, is a further exception. 2007 is the last year when their assets are not consolidated into the assets of Fortis. Column 11 shows whether the global ultimate owner of the institution is based within the EU or outside the EU (Rest of World (RW)). Table 2 follows the same logic as Table 1, however it includes only banking groups, displaying the 120 biggest in EU27. Table 2 thus exclude insurance companies, the 20 largest of which are in Table 3. Table 4 takes the largest banks within Table 2 with an ultimate owner outside the EU, and ranks them. In Table 5, we have ranked the 100 biggest institutions according to the number of member states in which they have a presence in the sense of being ultimate owners of either an own dependency, or ultimate owner of other institutions, in other member states. Apart from the order it is the same list as Table 1. Figures 1 and 2 visualize one further exploration of the database in a pie-chart. We took the list from Table 1 for Figure 1 (100 largest institutions) and Table 2 (120 largest banks) for Figure 2. We then eliminated all companies with a presence in less than 3 member states on the basis of this being a common threshold for the definition of a cross-border institution. This exercise allows us to analyse truly cross-border financial institutions more closely. We further eliminated ultimately foreign (non-EU) owned banks, as it would have been difficult to assign them to one single EU member state only in some cases. Doing this elimination exercise to Table 1 resulted in the figure of 40 groups having a presence in 3 or more Member states (Figure 1).1 Figure 1 contains a chart with the aggregate assets from all member states among the 40 cross-border groups defined above, and assigns them to each member state where their ultimate ownership originates. It has to be kept in mind that this data can only arrive at an approximation of the true situation. From this list it can be carefully established that UK financial groups have the strongest cross border activity with 28% of total assets; close after that come Germany, France and the Netherlands. In the top 40 groups with a presence of 3 member states or more, banks are dominating with the exception of Allianz Group and Fortis and ING as bank-insurance groups. Some groups such as Scandinavian groups limit their cross border activity to their area, others such as Unicredit group in Central and Eastern Europe specialise in certain areas. In terms of total assets, it is not surprising to find the UK, France and Germany as the top 3 countries.