Building Global Banks: A Comparative Analysis of European Banks Over Time

Abstract

The importance of the financial sector in any economy is self-evident. Banks provide a wide range of financial services in all sectors of the economy. The purpose of this study is to analyze how European banks have developed from 2003 to 2007 based on three questions. Five European banks served as case studies to analyze their growth through qualitative and quantitative methods using a descriptive rectangle model based on financial statement framework. It is found that the banks developed unsystematically through acquisitions, joint ventures and joint investments in different countries and did not follow a systematic pattern to expand their business operations. Expansion of core banking business was less significant. It was also found that the financial statements; especially financial assets were interpreted in a way that is difficult to understand for external users. All five Banks achieved strong growth from 2003 to 2006, but 2007 was problematic in some of their divisions due to real estate crises which started in US, and then spread on to financial institutions all over the world.