R&D (Mediobanca): banks are growing in size, but only the European ones are internationalising

R&S, the Mediobanca company which has been carrying out economic and financial studies since 1970, has completed the eighth edition of the survey on the main banks based in Europe, Japan, the United States and China, highlighting how from 2000 to 2009 the institutions surveyed examination have considerably increased in size. The growth in size occurred both as a result of internal development and as a result of mergers and acquisitions. As a result of the latter, the number of banks considered fell from 99 (in 2000) to 61 in 2009, with a "loss" of 20 units in the United States, 10 in Europe and 8 in Japan. The survey also highlights the greater degree of internationalization of European banks compared to those of the USA and Japan, which are instead, with the exception of the largest, essentially concentrated in domestic markets. Within the European framework and in terms of risk, the research highlights some notable differences between the Italian banking system and those of the main European countries. If the core tier I data does not see our institutions in the top positions of the ranking in terms of leverage, the average of the European banks examined is 27,4, while Intesa Sanpaolo and Unicredit stop at 22,1 and 21,5. A risk profile further moderated by the low exposure to derivatives (7% and 9,3% respectively) against 34,5% of Deutsche Bank, 33,3% of UBS and 29,4% of Royal Bank of Scotland. The research also highlights some critical issues in the balance sheets of the seven largest German state Landesbanks, examined for the three-year period 2007-09: the aggregate losses for the two-year period 2008-09 are equal to 117% and 26% of revenues respectively. These losses represent one third of the equity at the beginning of the period. Among the main causes, the bad quality of the loans and the securities portfolio, which led to heavy write-downs in the income statement, to which must be added, in 2008, the highly negative result of the trading activity. Despite the substantial write-downs to the income statement – ​​as well as other financial operations aimed at taking risky assets off the balance sheet – doubtful loans still represented 39% of equity capital at the end of 2009, a good 18 points more than the European average. Almost all of the ten Chinese banks examined in the survey (2004-2009) are attributable to state control or dominant influence (only one is entirely owned by private capital). In some institutions there are significant participations by European banks, even if foreign investors cannot hold more than 20% of the capital of local banks. The main investment banks, underlines the research, increased their revenues by almost 2010% in 9, thanks to the growth in net commissions (+16,7%), which alone account for half of revenues, and in income from trading ( +12,7%). The cost structure is characterized above all by the high incidence of labor costs which reached 2010% of revenues in 52 (for European commercial banks this incidence is 35%, for US ones 30%).