remain manageable by the individual enterprise and by the market as a whole. specific banks will withdraw from the market in future, too ; the propensity to withdraw might even increase. it is therefore essential for credit institutions, supervisory authorities and policy makers to safeguard the stability of the european financial system effectively. only then can the european banking and financial sector discharge its macroeconomic duties, that is to say, bolster economic growth and employment efficiently. thank you very much for your attention!

mould the structure of the banking sector in different ways from in the past. what i am thinking of is one of the most conspicuous developments in the field of banking, namely the consolidation process. a topical example of that is the recently announced merger of banca intesa and banca commerciale italiana ( bci ). that merger is intended to create the largest credit institution in italy, which wishes to establish itself among the big banks of europe. the trend towards consolidation in the european financial system, which has been evident for a number of years, has several dimensions, notably : • the geographical aspect ; and • the question of which banking categories are affected, and why. an analysis shows that mergers in the european banking sector have hitherto mainly taken place within national markets. mergers between smaller banks ( especially in the savings bank and cooperative bank sectors ) are in the forefront in terms of number. in these areas, the objective of mergers is frequently to reach an optimum size of bank or even to ensure the survival of the institution. the optimum minimum size of a bank ( which is difficult to define anyway ) has presumably increased in recent years, not least on account of the need to invest in state - of - the - art banking technology, and to ensure more efficient compliance with supervisory requirements. mergers and takeovers involving major, mainly private institutions must undoubtedly be seen against the background of the need to secure a better position on national markets. ultimately, however, all mergers are motivated by the wish to cut costs by exploiting rationalisation potentials, for instance by reducing the branch network, some of which is then redundant. altogether, although the number of mergers in europe declined in the second half of the nineties, the volume of the business operations involved substantially increased. such mergers resulted in the creation of more than fifteen of the thirty largest banks in the euro area, and the average size of the five largest banks in europe has doubled since 1995. as a result, the degree of concentration on the banking markets of many countries has vastly increased. especially in the smaller countries of europe, the five largest banks often account for more than 50 % of the national market. in some countries, such as belgium or the netherlands, the concentration is even more marked ; there, in each country the two largest banking corporations account for over 90 % of the total volume of business. in the larger countries, the degree of concentration is considerably lower, with germany having the least concentrated banking market in the euro area