Mergers and Acquisitions to Reduce Europe's Overbanking

Europe is vastly overbanked and overbranched, according to a recent of 100 European banks from 13 countries.

The survey that the UK is the least overbanked country in Europe, with two banks million people, while central Europe is the most overbanked, that is, Germany (44), Switzerland (58) and Austria (131). Southern Europe - Italy, Portugal and Spain - is overbranched rather than overbanked. Europe as a whole has 23 banks per million population.

The survey concludes that the _ of banks in Europe is set to fall by over a quarter in the next 10 years, or by about 2,300, of which 1,300 will be in Central Europe, since the bank extinction rate of the last 10 years is likely to continue.

The survey concludes that _ in banking has forced down the rate of return on assets to an uneconomic _. The main competitors have been the securities and insurance industries. The decline in overbanking will be _ about mainly through mergers and acquisitions.

Other conclusions include the prediction that there will be more domestic than cross-border _ many of which will involve small savings and mutual banks, merging in some cases with commercial banks.

Bankers see European economic and monetary union (EMU) as the single most important _ of the decline in the number of banks, linked with competition and technology. The Euro will bring down the barriers to the _ banking market and make bank interest rates lower, more transparent and more competitive. The _ of telephone and electronic banking will reduce the need for branches and accentuate competition both within and _ borders.

Words you may need:

Англійський варіант Російський варіант Український варіант

acquisition приобретение, поглощение придбання,

поглинення extinction вымирание вимирання

force down снижать знижувати

the rate of return норма прибыли норма прибутку

prediction предсказание; прогноз пророкування,

прогноз

transparent прозрачный прозорий

Accentuate подчеркивать підкреслювати

Discussion

Ex.8. Read and discuss the texts that follow.

1. Explain the difference between loans and overdrafts.

2. Discuss the services provided by banks. A) Bank Loans and Overdrafts

There are two principal ways in which a businessman can borrow money from his bank: by means of a loan and by means of an overdraft.

An overdraft is "a sum of money drawn from a bank by a customer that is more than the amount he holds in his account with the bank". Permission of the bank has to be obtained for this facility, and interest is charged on the outstanding amount.

Here is an extract from Statement of Terms and Conditions for Non-U.S. Banks of Citibank, N.Y.:

"Customers will receive overdraft interest statements monthy. However, under exceptional temporary circumstances, statements may be issued daily. Charges for overdrafts will be calculated in accordance with normal banking practice at Citibank, New York."

When the bank makes a loan, a separate loan account is opened at the bank in the borrower's name. The amount of the loan is debited in the loan account and credited in the customer's current account. Interest is charged on the full amount of the loan even though the borrower might not draw on the full amount immediately.

Because bank funds must be kept fluid, loans are nearly always short term, and a bank will not lend money to a customer unless it knows that the money can be repaid quickly. Normally the bank likes to have its loans repaid or its overdrafts charged, within a year.

Words you may need:

Англійський варіант Російський варіант Український варіант

to charge interest взимать проценты стягувати відсотки

outstanding amount сумма превышения сума перевищення

extract выдержка, отрывок витримка (з тексту),

уривок

terms and conditions условия умови

statement выписка виписка

temporary временный тимчасовий

charges расходы, издержки видатки, витрати

calculate рассчитывать розраховувати

separate отдельный окремий

to keep fluid работать (о деньгах) працювати (про

гроші)

с) Discuss the kinds of banks described in the text and their functions.