The rest of the world recovers apace from 2001’s travails, but Europe’s

pre-tax profits are lagging behind.The Top 300 European banks showed a minor recovery from the traumas of 2001 with aggregate pre-tax profits up 1.3% to $120.2bn. This shows a slower recovery than that for the Top 1000 World Banks reported in the July 2003 edition of The Banker where aggregate pre-tax profits grew 13.3% in spite of the continuing parlous state of the Japanese banking sector.

The UK’s HSBC again topped the listing ahead of France’s Credit Agricole but the big change at the top came from Royal Bank of Scotland, which jumped ahead of Deutsche Bank into third place. The major players remained largely unchanged, with ING Bank and HBOS improving.

However, within Europe, the profit performances were mixed. Germany’s banks showed a 62.3% decline in aggregate pre-tax profits to $2.9bn (although its representation in the Top 300 increased by two) while French banks recorded a 19.3% increase to $19.2bn from one bank fewer than in the previous year. The UK figures remained static at $35.6bn from 28 banks (30 in the previous year), largely due to the $1.6bn loss sustained by Abbey National, which offset the steady increases made by the other major banks.

Merger activity has been limited to the acquisition of small central European banks by the usual players in Austria and Italy. In Hungary, OTP Bank acquired Investicná a Rozvojová Banka (now called OTP Banka Slavonsko) in Slovakia, in a deal finalised in April 2002, and in 2003 it acquired Bulgaria’s DSK Bank.

Germany has the highest representation in the Top 300 with 59 banks, followed by Others 46 (Andorra 3, Cyprus 3, Greece 7, Iceland 1, Ireland 6, Liechtenstein 3, Portugal 6, Russia 9 and Turkey 8), Spain 40, Italy 30 and the UK 28.

Austria has lost two banks from the listing this year, largely through the implementation of a curious piece of banking legislation enacted in September 2002, which requires members of a cross-guarantee system (Haftungsverbund) to be consolidated into the majority owner of the cross-guarantee company’s financial reports. In the case of the savings bank sector in Austria which this law covers, Erste Bank is the majority holder in the cross-guarantee company and fully consolidates the savings banks concerned including Allgemeine Sparkasse Oberösterreich Bank, Steiermarkische Bank und Sparkassen and Kärntner Sparkasse in which it only has minority shareholdings of 26.9%, 25.0% and 10.0% respectively. Under the normal rules at The Banker to avoid double counting of financial data this means that all three banks have been excluded in the preparation of this listing. Unfortunately this position did not become apparent until after the Top 1000 World banks listings had been published.


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