This sharp decline in the number of credit institutions is mainly the result of mergers among savings and co-operative banks, which epitomise what one may call “consolidating” or “defensive” mergers – mainly aimed at cutting costs and diversifying risks but also at reaching a size of own funds compatible with a regulation that has been agreed at the EU level. So far, this consolidation process has taken place mainly within national boundaries, with the possible exception of the Benelux and Nordic countries. The preference for domestic mergers (as opposed to cross-border mergers) may be explained by the fact that the relevant market for retail services remains national rather than pan-European. Furthermore, the scope for cost-cutting appears to be larger if the merging institutions have overlapping operations. The fact that cultural “proximity”, notably in the corporate style of governance and management, is traditionally seen as a key factor in the success of mergers may also have played a role. However, from my own professional experience of running a truly pan-European bank, I could add that professional identity is a much stronger force for unity than national identity is a force for separation. Conclusion  BIS Review 63/1999  4  I have outlined the likely pattern of evolution that we envisage for the euro area financial system. Summing up the various elements, we see a pattern which leads towards a financial system that should perform its functions more efficiently using the advantages available to the financial system of a large economy.
The third step is the resolution of banks, applied by the Bank of Albania in view of the new mandate. Similar to recovery plans, the resolution plans drafted by the Bank of Albania aim to identify the legal and structural obstacles and difficulties with financial resources that banks face, toward resolvability. In this regard, the resolution plans are one of the key instruments to facilitate the Bank of Albania’s resolution implementation. This year in April, the Bank of Albania approved a bylaw that defines the content of resolution plans. Then banks were required to report a broad set of data for drafting these plans, based on the model of the European Banking Authority and we are currently in the process of drafting them. The drafting of the banks resolution plans is complicated, which includes complex and cross-border issues that must be implemented and coordinated within a short period of time. Hence, the resolution planning is an on-going process and a long-term mission to remove obstacles against the possibility for resolution action in banks. This planning does not mean drafting an annual plan that is stored somewhere in some shelf and it is dusted off only when its implementation is necessary; instead, it is the beginning of a long process of restructuring all aspects of the banking business that may hinder this process.