Competitiveness of European financial services
Europe’s banks and asset managers, with the support of the region’s politicians and regulators, must seize an opportunity to close the ‘competitiveness gap’ with their peers in the US and the rest of the world, a report commissioned by Luxembourg for Finance and published today by OMFIF urges.
The report is a data study of financial competitiveness, assessing indicators such as size, diversification, profitability, pricing power and valuation. It reveals in stark terms the decline of European financial services firms on a global scale since the financial crisis of 2008.
- Fifteen years ago, the total market capitalisation of Europe’s banks was close to double that of US banks. Today, total US market cap is twice that of Europe’s.
- In asset management, Europe’s institutional investors represented 47% of the top 100 global firms by assets under management.
- In 2022, they accounted for just 22% of AuM, compared to 70% for US fund managers.
- Last year, just two of the leading 20 global banks by market capitalisation were headquartered in the European Union, as were just two of the leading 20 global fund managers.
- For much of the last decade, Europe’s banks and asset managers have been hampered by fragmentation, the absence of a working capital markets or banking union, a more severe regulatory environment, the implications of low interest rates and an overall lack of risk culture.