Barriers to entry Some small banks may go to the wall, but creating a European super-bank is also going to be difficult. Retail banking accounts for the bulk of the financial business, especially in continental Europe. They offer accounts, credit cards, loans and mortgages. It is a safe business, albeit not as profitable as that of investment banks. However, there are legal and cultural barriers for retail banks to move into other Eurozone countries.
Interest bearing current accounts, for example, are illegal in France.
And customer loyalty and brand recognition may mean that acquisition is the surest route to expansion. Moving into the wholesale sector of investment banking is even more difficult. Major players like Deutsche Bank and Dresdner have bought UK investment houses Morgan Grenfell and Kleinwort Benson to insure their presence in this market. Some of the French banks with deep pockets also have aspirations in this direction. Intense competition and the heavy losses incurred during the recent turmoil on the world's financial markets have already reduced the number of players in investment banking.