The average share of foreign branches and subsidiaries accounts for only about 15% of the euro area banking market. From a euro area-wide perspective, the lack of progress in creating pan-European banks is a reflection of significant impediments to cross-border M&As, which are hindering the realisation of economies of scale and blocking the beneficial effects of increased efficiency within the EU economy.
The pace of integration in the banking sector has been uneven. Integration is well advanced in wholesale and capital-related activities, while it is lagging behind in the retail markets. This partly reflects differences in the nature of competition in these segments of financial services.