The EMEA published the new Banking Business Monitor for Europe 2005-2021 co-authored by EMEA President, Prof. Rym Ayadi, Professor, Bayes Business School – City, University of London, and Chair of the European Banking Authority – Banking Stakeholders Group (EBA-BSG), and Doriana Cucinelli, Associate Professor of Banking, Università degli Studi di Parma and EMEA Research Fellow.

The Banking Business Models (BBM) Monitor 2024 Europe is the European edition of the bank business model analysis, which is part of the Global Monitor of banks and credit unions business models. The Global Monitor covers Europe, United States of America, Canada Middle East and AFrica. More countries will be added subject to data availability.

The BBM Monitor 2024 for Europe identifies the business models of 3,503 banks covering more than 95% of assets of the European Union plus EFTA countries from 2005 to 2021, which accounts for 35,567 bank-year observations. Using a unique definition and a careful selection of multidimensional attributes and the development of state-of-the-art clustering methodologies, the BBM Monitor provides a coherent approach to analyse banks and to monitor their behaviour over time. The monitor covers issues such as interaction with ownership structures, size, internationalization, migration, financial performance and operational efficiency, contribution to the real economy, risk, resilience, robustness and resolution.

The BBM Monitor is geared towards bank practitioners, policy makers, regulators, supervisors, and academics who are interested in independent research, analysis and expert views on the banking sector in Europe.

The BBM Monitor and Results will be updated annually and potentially extended subject to data availability. The business model identification results of the BBM Monitor 2024 for Europe are available for all the bank-year observations upon request.

The BBM research is promoted and funded by the Euro-Mediterranean Economists Association (EMEA). Collaboration is acknowledged with the Centre of Banking Research of the Bayes Business School of the City University of London. The BBM is disseminated on https://www.euromed-economists.org , www.bbmresearch.org and www.emanes.org

The Euro-Mediterranean Economists Association (EMEA) is a Barcelona-based regional organization established in 2012, that serves as a leading independent and innovative policy research institution; a forum for debate on the political and socio-economic reforms in Mediterranean and Africa; and promoter of actions and initiatives that fulfil objectives of sustainability, inclusiveness, regional integration and prosperity. As a “think and act tank”, it strives to contribute decisively to the transition process in the Mediterranean and Africa amidst climatic challenges, unprecedented global financial and economic crises and geopolitical uncertainties and conflicts.

The Centre for Banking Research (CBR) of the Bayes Business School, City University of London, promotes and disseminate topical and high calibre academic research in banking.

The EU-Mediterranean and African Network for Economic Studies (EMANES), is a collaborative and  innovative regional network of economic and policy research institutions and think tanks from Europe, the Mediterranean and Africa, working towards a renewed vision for socio-economic development that brings prosperity, sustainability, inclusion and resilience. EMANES is coordinated and funded by EMEA.

The Banking Business Models (BBM) Monitor 2019 Europe is the European edition of the bank business models analysis, which is part of the Global Monitor of banks and credit unions business models. The Global Monitor covers Europe, United States of America and Canada. More countries will be added subject to data availability.

The BBM Monitor 2019 for Europe identifies the business models of 3,287 banks covering more than 95% of assets of the European Union plus EFTA countries from 2005 to 2017, which accounts for 25,402 bank-year observations. Using a unique definition and a careful selection of multi- dimensional attributes and the development of state-of-the-art clustering methodologies, the BBM Monitor provides a coherent approach to analyse banks and to monitor their behaviour over time. The Monitor covers issues such as interaction with ownership structures, size, internationalisation, migration, financial performance and operational efficiency, contribution to the real economy, risk, resilience, robustness and resolution.

The BBM Monitor is geared towards bank practitioners, policy makers, regulators, supervisors and academics who are interested in independent research, analysis and expert views on the banking sector in Europe.

The BBM Monitor and Results will be updated annually and potentially extended, subject to data availability. The business model identification results of the BBM Monitor 2019 for Europe are available for all the bank-year observations upon request.

This study comes in response to the continuing evolution of market structures and regulatory overhaul since the financial crisis of 2007-2009 in the US. The banking sector has largely suffered after the collapse of Lehman Brothers in September 2008. The initial context of decades of deregulation has been followed by the Dodd-Frank Act to respond to the overly damaging 2007-2009 global financial crisis, with the aim of safeguarding financial stability and putting an end to government bailouts.

This first investigation into the bank and credit union business models for the United States, offers an extensive insight into 10,352 banks and 10,392 credit unions, which respectively account for almost all total banking assets of the country and more than 80% of the total assets of credit unions. Using regulatory data from 2000 to 2014, the two samples of 108,226 bank-year observations and 115,516 credit-union-year observations are each clustered into distinct bank and credit union business models, using a novel definition and applying a robust clustering methodology. The definition uses the activity and funding profiles of a bank or a credit union based on balance sheet indicators.

Four bank business models and three credit union business models are identified. The study proceeds then by thorough assessments of the interaction between business models and size, as well as the migration, financial performance, contribution to the real economy, risk and response to regulation of US banks and credit unions, using a rich palette of indicators.

This paper has three main aims. First, by applying the Ayadi et al. (2016) approach, we provide fresh evidence of different levels of bank risk (measured by the distance to default), considering the possible specificities across business models of European banking. Second, we try to explain those differences via the adoption of IRB and RWA dispersion, which raises the suspicion of regulatory arbitrage to a different extent across bank business models. Third, we explore whether, and to what extent, the degree of regulatory arbitrage varies across bank business models. Our findings show that one of the five business models identified by Ayadi et al. (2016) is deviant. This is the case for the banks classified as Diversified Retail type 2 which seem to be mutants and systematically engage in regulatory arbitrage. Our conclusion is that bank business models matter in risk assessment and regulation.

In the context of evolving market structures and regulations, where fundamental changes keep applying to the European Banking Sector, especially since the financial crisis of 2007-2009, the banks’ business models analysis provides market participants, depositors, creditors, regulators and supervisors with a useful tool to better understand the nature of risk attached to each bank business model and its contribution to systemic risk throughout the economic cycle. The 2015 Business Models Monitor of the European banking sector assesses the banking sector structure in light of the changing economic, legislative and supervisory environment.

With the objective of covering the entire European banking sector, the 2015 Business Model Monitor includes 2,528 banking groups and subsidiaries of non-European banks, which account for more than 95% of the EEA and Swiss banking assets. The Monitor also uses a unique definition and a novel clustering model featuring SAS programming. For the analysis, the 13,040 bank-year observations were clustered into five broad categories: focused retail, diversified retail (Type I and Type II), wholesale and investment banks.

CEPS and the International Observatory on Financial Services Cooperatives (IOFSC) at HEC Montreal have initiated an annual monitoring exercise on banking business models in the EU. Based on their balance sheet structures, 147 European banks that account for more than 80% of the industry assets were categorised in four business models. The Monitor emphasises the ownership structures and assesses the financial and economic performance, resilience and robustness, before, during and after the financial and economic crises across retail diversified-, retail focused-, investment-, and wholesale oriented banks. Inter alia, this edition of the Monitor finds that banks that engage more in traditional retail banking activities with a mix of funding sources fared well as compared to other bank models during the different phases of the crisis.

The authors are Rym Ayadi, Senior Fellow at CEPS and Professor HEC Montreal, and Willem Pieter De Groen, Researcher at CEPS. Statistical support and other contributions were provided by Marie-Josée Lapointe, André Michelet, Harol Rey, Ibtihel Sassi and Cristina Tita, members of the research team at the International Observatory on Financial Services Cooperatives (IOFSC), HEC Montreal.

Amidst talks of establishing an EU-wide banking union, the recent changes in the regulatory framework and the rethinking of the future of European banking structure, the future of EU bank regulation is inextricably linked to banks’ business models. Using a sample of over 70 banks, which overlaps with those subjected to the EBA’s 2011 stress tests, this report emphasizes the key regulatory gaps that emerge from a comprehensive analysis of the soundness and performance of bank business models and provides policy-makers with guidance to reinforce the evolving regulatory framework in European banking.

The study was commissioned by the Greens-European Free Alliance Political Group in the European Parliament and directed by Dr. Rym Ayadi, Senior Research Fellow and Head of the Financial Institutions and Prudential Policy research unit at CEPS. The research team included Emrah Arbak, Researcher and Willem Pieter de Groen, Research Assistant in the same unit at CEPS, with a contribution from David T. Llewellyn of Loughborough University, the Cass Business School in London and the Vienna University of Economics and Business Administration

The next few years will be critical for Europe’s banking industry as it faces a number of financial sector reforms that will have a decisive impact on the dominant practices and business models followed across the EU. This timely report presents the results of the first screening exercise conducted of the performance, stability, risk, efficiency and corporate governance of 26 major European banks, before, during and after the financial crisis, with a view to identifying key strengths and weaknesses inherent in the dominant business models in light of the upcoming regulatory changes.

The study was commissioned by the Greens-European Free Alliance Political Group in the European Parliament and directed by Dr. Rym Ayadi, Senior Research Fellow and Head of the Financial Institutions and Prudential Policy research unit at CEPS. The research team included Emrah Arbak, Researcher and Willem Pieter de Groen, Research Assistant in the same unit at CEPS. David T. Llewellyn of Loughborough University, the Cass Business School in London and the Vienna University of Economics and Business Administration contributed an overall review and written contributions, including the Foreword.

This book investigates the merits of a diverse banking system with a special focus on the performance and role of cooperative banks in seven European countries where they are prominent (Austria, Finland, France, Germany, Italy, the Netherlands and Spain). The theoretical and empirical arguments that are developed in this book tend to support the view that it is economically beneficial to have stakeholder-value banks with a dual bottom-line function, such as cooperative banks. For those who accept this premise, it would suggest that policy-makers should not take or support actions that could jeopardise this valuable element of the financial system in various countries in Europe and of the emerging integrated European financial system.

In the aftermath of the financial crisis, the foundations of modern and innovative financial systems developed over decades have suffered serious damage. This has triggered massive state interventions and has led authorities to revamp the regulatory structures and frameworks. While many voices have called for a return to more traditional approaches to banking and finance, no one has argued the merits of diversity.

This book investigates the merits of a diverse banking system with a special focus on the performance and role of savings banks in selected European countries where they are still prominent (Austria, Germany and Spain) and where they have progressively disappeared (Belgium and Italy). The theoretical and empirical arguments that are developed in this book tend to support the view that it is economically and socially beneficial to have ‘dual bottom-line’ institutions, such as savings banks. For those who accept this premise, it would suggest that policy-makers should not take or support actions that could jeopardise this valuable element of the financial system in various countries in Europe and of the emerging integrated European financial system.