This is concerning, since it suggests that euro area banks are not yet in a position to exploit the economies of scope and scale that should be possible in a truly integrated banking sector, leaving a banking landscape that remains fragmented along national lines.
And despite the launch of banking union, this trend is actually worsening: cross-border mergers and acquisitions accounted for just 9% of total transactions in 2016, against 15% for the period 2000 to 2015. The still-unfinished state of banking union is one reason why. Two factors make it difficult for banks to execute a European balance sheet strategy.