Wallenberg attacks EU banking protectionism

One of Sweden''s most powerful bankers attacks EU banking protectionism in a call for more banking consolidation.

In front of a packed gathering of almost 6,000 Sibos delegates, Jacob Wallenberg, vice chairman of SEB and chairman of Investor AB, attacked the barriers that are being erected to further European banking integration.

"Banking remains one of the last bastions of protectionism and nationalism" in the continent, he said. "A fully consolidated and fully efficient [EU] banking industry is still a long way off."

Wallenberg noted in his speech that the forces of change were great. New technology had changed the scope of what banks could now do. New regulations - such as the 42 legislative changes called for by the EU - are changing the ways in which banks operate. The emergence of new opportunities in emerging markets is further capturing the imagination of banks.

Yet despite all these triggers for change, Wallenberg noted that it was not enough. "A true EU banking market is not a reality...there are only a few global [EU] players," he said. "Legislative action on its own is not enough".

He noted that there were still 5,000 banks in the EU market, which pointed to the fragmented nature of the continent's banking system. In comparison there were 7,000 banks in the US. However this is half the number of banks that were present in the US 20 years ago, showing that the speed of consolidation was much faster in the US than in the EU. "We are a long way before the EU will be on a par with the US," he said.

He also called on banks themselves to embrace the changes that are sweeping the industry. In particular he called on them to accept the inevitable that changes to cross border payments and clearing systems would have to be made. In particular he referred to the idea of the Single European Payment Area or SEPA, which calls for the same level of service and costs for making payments to any country in the EU as it does to do so domestically.

"This will be a major change to the EU payment system," he said. "But I believe that over time SEPA will be inevitable. He said that banks operating in Europe would have to "simplify, innovate and transform" themselves to make this possible. He noted that he, like many other bankers, had heard the complaints from retail banking clients over the costs of making international transfers and payments, a situation he found "embarrassing". But he said, "I thank the apathy of our customers who are more likely to get a divorce than change their banking relationship."