Indeed, even though the number of branches in the euro area declined by 16% between 2008 and 2014, almost half of the decrease in the number of local bank units was accounted for by Spain. Countries undergoing structural adjustment programmes have also seen the largest relative decrease in the number of credit institutions.
Banking systems in some larger countries have also adjusted but remain at relatively low concentration levels, implying scope for rationalisation and consolidation without reinforcing the “too-big-to-fail” problem. To navigate the new environment, banks’ business models will need to adjust as well.