September 27, 2017 / 7:33 AM / a year ago

Oversized European banking sector likely to shrink: ECB's Nouy

FRANKFURT (Reuters) - Europe’s bank sector has grown too big and may need to shrink, possibly through mergers or failures, Daniele Nouy, the European Central Bank’s top bank supervisor said on Wednesday.

FILE PHOTO: Daniele Nouy, chair of the Supervisory Board of the European Central Bank, speaks at a Thomson Reuters newsmaker event at Canary Wharf in London November 28, 2014. REUTERS/Neil Hall/File Photo

“All in all, it seems that the European banking sector might indeed have become too much of a good thing,” Nouy said. “And we can see at least one of the health issues related to this – many banks in the euro area do not earn their cost of capital.

“It seems that there are too many banks competing for customers,” Nouy added. “There is a good chance that the banking sector will indeed shrink”

Reporting by Balazs Koranyi; Editing by Francesco Canepa

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