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No 4 (June 96/Juin 96/Juni 96)
Within the first three years of the single banking market the overall number of cross-border branches of credit institutions has increased by 58%. This was the outcome of a study undertaken by the Groupe de Contact(1) on behalf of the EU Banking Advisory Committee, covering the EU and the rest of the EEA. The increase was not a one-off creation of new branches right at the inception of the single banking market since the average increase of about 60 new branches per year has also been confirmed for 1995. These results demonstrate the positive impact of the Single Banking Market.
One of the important objectives of the so-called Second Banking Coordination Directive (2) was to facilitate the cross-border establishment of bank branches in the EU through the abolition of extra endowment capital for the branch in the host country, through the home country control principle which diminished the volume of legislation to be observed by the branch through the number of supervisory authorities to be reported to by the branch. Columns 1, 3 and 5 of the Table demonstrate the "branching-in" of banks from other Member States and EEA countries. It can be seen that some Member States appear as preferred host Member State, such as the UK (117), Luxembourg (69) and Germany (47). In comparing the figures, the size and the location of the country are to be taken into account. In looking at the percentage increase in column 5, one should be aware of the basis effect, i.e. although Sweden had the highest percentage increase (+ 367%) the total number of new cross-border branches (+ 11) is much lower than that for the UK (+ 24), where the percentage increase from the basis figure of 93 existing branches was "modest" (+ 26%).
Columns 2, 4 and 6 of the Table show the development of the "branching-out". Again, banks in some Member States were more active in looking for new establishments through branches in other Member States. At the top were countries like Germany (93), France (83) and the UK (70).
TABLE ON THE CROSS-BORDER BANK BRANCHING IN THE SINGLE BANKING MARKET IN THE FIRST THREE YEARS
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(1) This is a group of persons from each Member State's competent authorites responsible for prudential supervision of credit institutions.
(2) Directive 89/646/EEC of 15/12/1989, EC Official Journal EC N.386 of 30/12/1989.
(3) In Iceland and Liechtenstein there are no branches of banks from other EEA member countries