600 - European banks after the global financial crisis: Peak accumulated losses, twin crises and business models

DNB Working Papers
Date 3 July 2018
This paper takes stock of European banks’ accumulated losses since 2007 and relates these to bank characteristics. In line with previous studies, we find that large, market-oriented banks were particularly hit by the 2007-2009 global financial crisis whereas smaller, retail-oriented banks weathered these years relatively well. In subsequent years, however, the picture reversed and retail-oriented banks were most affected. Over the entire period, medium-sized banks suffered most losses and often needed state aid. This suggests that measures to contain systemic risk, such as capital surcharges and bail-in requirements, are as relevant for these institutions as they are for the largest banks.
 
Keywords: Bank profitability, Business model, Financial crisis.
JEL classifications: G01, G21.