Major changes underway in European banking sector

Abstract

Weak profitability is a major problem for the European banking sector. Particularly in the euro area, a weakly performing economy and related impairment losses, subdued credit dynamics and prolonged low interest rates have weakened banks' profitability. The profitability of major European banks has also been undermined by court costs and sanctions imposed by the authorities. Growing regulation and an influx of new competitors on the market increase the need for balance sheet adjustment. The changes also affect Finnish banks.