Structure of Euro Area Banking

StructureofEuroAreaBanking

LightlyCapitalizedCoreUniversalBanks

Deutsche,BNPParibas,CreditAgricole,INGSocieteGenerale,Commerzbank,Dexia,Natixis

BetterCapitalizedPeripheryCommercialBanks

Unicredit,Santander,Intesa,BBVA

Loans

Mega-BanksExpandedUnsustainably(EuroareabankassetsasaratiotoGDP)

050

100150200250300350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Otherbanks 12Mega-Banks

LargeUniversalEuropeanBanksExploitedInternalRiskModelsandBecameMoreFragile

0

2

4

6

8

10

2 4 6 8 10 12

UniversalCommercial

1996

SimpleLeverageRatio:Boo

kequity/TotalAssets

BaselRatio:Tier1Capital/RiskWeightedAssets

0

2

4

6

8

10

2 4 6 8 10 12

Universalcommercial

2008

BaselRatio:Tier1Capital/RiskWeightedAssets

SimpleL

everageR

atio:Boo

kequity/TotalAssets

StructureofUSBankingin2002

LightlyCapitalizedUSInvestmentBanks

MorganStanley,GoldmanSachs,LehmanBrothers,MerrillLynch,BearSterns

StronglyCapitalizedCommercialBanks

Citi,JPMorgan,BankofAmerica,WellsFargo,Wachovia,BankOneCorporation,FleetBostonFinancialCorporation,U.S.Bancorp

GSEMortgages

0

10

20

30

40

50

60

1980 2002

Securitizations GSEs CommercialBanks

Source:USFlowofFunds

BanksSold MostMortgagesToMarkets by2002(AssetsasapercentofUSGDP)

PrivateMortgageSecuritiesSurgedAfter2003(AssetsasapercentofUSGDP)

0

10

20

30

40

50

60

981 001 021 041 061 081

GSE Private

-20

0

20

40

60

80

100

2000 2007Assets:Periphery Assets:USandUK LiabilitiesUS,UK,andPeriphery

Source:BankforInternatinoal Settlements

CoreEuroAreaBanksExpandedRapidlyOverseas(AssetsandLiabilitiesasapercentofGDP)

TheNorthAtlanticFinancialBoom

LightlyCapitalizedU.S.InvestmentBanks

WellCapitalizedUnitedStates

CommercialBanks

LightlyCapitalizedEuroAreaCoreUniversalBanks

EuroAreaPeripheryCommercialBanks

CrossAtlanticDrift

Mortgages Loans

MortgageAssets

Repos

CostsofGlobalCrisesRoseWithCapitalMobility(RatiotoGlobalGDP)

0

1

2

3

BrettonWoods LatinAmerica ERM Asia NorthAtlantic

Growth CADeficit

Source:WorldEconomic Outlook

ConsumerCredit:Asset-BackedSecurityStock(RatiotoGDP)

0

1

2

3

4

5

6

881 921 961 001 041 081 121