and the attendant business plans must be appropriately assessed. 10 / 15 we have seen a 30 % reduction in the number of institutions there were in 2009. more recently we have seen how, in the absence of a context of acute crisis, many of the corporate operations announced do not reach fruition. meantime, in some of the operations that are finalised, integration problems continue to be seen for years. our task in a setting such as the present one is to ensure that any merger process should lead to the creation of a new, more solvent institution, with a sound business model, enabling structural costs to be cut and, in short, value to be generated. we must of course assess these same aspects with a view to potential cross - border mergers in europe. the absence of such mergers may be seen as a sign that the banking union is not working as it should. true, several elements of the banking union are still not in place, including most notably the european deposit insurance scheme ( edis ). it is likewise true that the regulations affecting the sector are still too heterogeneous across the different member states. yet it seems that the very excess capacity of the banking sector is acting as an entry barrier to banks from other jurisdictions, given that the potential gain in costs and synergies arising from the elimination of duplicated networks and services occurs chiefly in national mergers. lastly, another means of improvement would stem from cost - cutting and the subsequent enhanced efficiency. admittedly, i did say our banks made notable efforts to shed the excess capacity in place pre - crisis ; but there still remains room for improvement. in any event, further gains in efficiency appear to be closely linked to technological transformation. technological change we are all aware that technological change is one of the main transformations banking must pursue. if we look at what has happened in recent years in other sectors, there is clearly a need for the banking business model to adapt. technological change is a complex matter, but one that is fundamental for tackling the future. it should be part and parcel of deeper reflections relating to the banking business model and its sustainability in the long term. naturally, technological adaptation calls in many cases for significant investment in systems to be made. however, such investment today will be key to future income. 11 / 15 clearly, the gains in efficiency will be very closely linked to technological change. most banking transactions in spain continue to be made through atms and bank windows. however, the proportion of online users is growing every

in ways which are not in the interests of their principals and when the latter lack the means to properly monitor and control the actions of the former. three main types of principal agent problems can occur in the management of firms : between managers and owners, between controlling and non - controlling shareholders and between a firm and its creditors. proper corporate governance structures are a means to mitigate principal agent problems and thus ensure that a firm can be managed efficiently for the mutual benefit of all of its stakeholders. because the operations of a large complex firm involve a host of non - controlling stakeholders, without effective corporate governance structures to mitigate principal agent problems, modern business would not be possible. one of the most important components of effective corporate governance structures are accurate and reliable financial reports. other key aspects are a clear legal framework which delineates the rights and obligations of all of the different stakeholders and which can be enforced effectively in the courts, and appropriate management and oversight structures within the firm, with clear responsibilities for the firm ’ s board of directors. financial reports provide a window into the operations of a firm which can give all of its stakeholders the information that they need to conduct transactions with confidence that they are not being taken advantage of in any way. for example, without accurate financial reports, minority shareholders cannot be certain that the firm in which they have invested their wealth is being managed in the best interests of all shareholders and not just those who control the firm ’ s management. financial reports are essential to enable a firm ’ s board of directors to evaluate the managers they have appointed. they are an essential tool for a firm ’ s board of directors, which is why a firm ’ s internal auditor usually reports directly to the board and not to the management, so that the board can be confident in the veracity of the financial reports. the requirements of modern firms for credit cannot be accommodated satisfactorily by lenders unless the latter have confidence that a firm can service its debts from its future revenues as a going concern, but such confidence is only possible if lenders have access to reliable financial information with which to evaluate the firm ’ s business prospects. for those firms seeking to mobilise capital by issuing equity or corporate bonds on the capital market, a history of financial reports is a prerequisite, because the institutional investors who are the main customers for corporate stocks and bonds rely heavily on financial reports to evaluate prospective investments. to maximise the benefit of financial reports for all stakeholders, it is essential that they be