Eurozone - how the markets are responding...

With the focus back on the Eurozone and the markets responding. Experienced Independent Financial Advisors Enable know it can be a worrying time. It’s interesting to see that when EU officials are doing their utmost to make banks slim their balance sheets, analysts have done the unthinkable and imagined what life would be like if European banks merged into a megabank.

The analysts at research provider CreditSights created the megabank by combining the most recent quarterly accounts of 22 banks: Commerzbank, Royal Bank of Scotland, HSBC, Lloyds Banking Group, Societe Generale, Danske Bank, Svenska Handelsbanken, Credit Agricole, BNP Paribas, Barclays, Banco Comercial Portugues, Banco Bilbao Vizcaya Argentaria, ING, Intesa Sanpaolo, UniCredit, Banco Santander, Credit Suisse Group, UBS, Nordea, SEB and Deutsche Bank.

The gargantuan beast would have a balance sheet of some €23.7 trillion with gross loans of €9.2 trillion at the end of June this year.  CreditSights estimated that Megabank would account for about 50% of the European banking sector, making it a “good proxy for the sector [that] illustrates trends across the region's banking industry”.

Although there are a handful of banks still reporting low double digit numbers for return on equity, the average RoE for Megabank was 4.9% in the first half of this year, according to CreditSights. Many banks had produced RoE numbers in excess of 20% in the years leading up to the 2007 financial crisis. Enable can offer independent financial Advice to help improve the digits return on your equity.