It is by no means certain which European banks will be well positioned post-Emu. Without the critical mass needed to challenge the first-tier US banks, most European institutions will have to focus on carving value out of niche market positions. Those banks that have benefited from operating in areas that the big US institutions have so far seen fit to ignore may have to find a new niche, and fast.
For mid-tier European banks, recent research by Andersen Consulting identifies strategies that have allowed a new superbreed to emerge in the financial services industry.
Andersen Consulting analyzed the equity returns, financial results and operating strategies of more than 250 financial services firms in 15 developed nations from 1987 to 1996. It dubbed the top third in this group - in terms of return to shareholders, adjusted for local stock market indices - "value capturers".
It finds that the performance gap in financial services is widening. A minority of organizations are generating high returns to their shareholders, and fewer still are combining shareholder return with high revenue growth.
A worrying fact for institutions that have been protected by national entry barriers is that firms in more competitive, deregulated markets perform far better for their shareholders, in general, than the firms in the more tightly regulated markets.