Bad news!
"European banks have made significant strides in reducing costs and improving their operational efficiency. However, they continue to lag behind their US counterparts in terms of market valuation and future growth prospects. In a study ... researchers ... find that the structural fragmentation of the European financial system is the key reason why investors continue to discount European banks. ...
The competitive disadvantage is especially pronounced in investment banking, where scale and capital market integration are crucial. US banks benefit from access to a large, unified market, enabling them to grow, attract capital, and expand in scalable, high-margin lines of business. In contrast, national market boundaries and fragmented regulation constrain European banks’ ability to develop and compete internationally.
The authors argue that a key part of the problem is the lack of a truly integrated European capital market. Cross-border lending, mergers, and investment activities remain rare, while national banking champions dominate domestic markets, with little incentive or regulatory support for cross-border expansion. ..."
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