Do you expect there to be further consolidation in the world banking industry? Neuber: The process of consolidation we have recently seen in global banking will continue at an accelerated pace. Apart from certain other factors, this trend will be driven both by increasing price competition (which will be further heightened by Emu) and the need for substantial investment in product development (in areas ranging from electronic banking to risk management) as well as the required service quality in the investment banking area. In response to these challenges, banks will seek to leverage economies of scale while at the same time sharpening their business focus.
Will there be large-scale cross-border - as well as domestic - bank mergers?
Neuber: The ongoing consolidation in the financial sector will lead to further mergers both on a national and international level, involving both banks and non-banks such as insurance companies. Institutions will use such mergers to manage costs through economies of scale, to extend their regional presence and customer bases, and to round off their product ranges. However, mergers always pose a management challenge and will not be successful unless the diverse corporate and national cultures are carefully integrated.