CAPITAL MARKETS IN THE EU

Capital markets in the EU have decreased since the financial crisis

And the situation in EU Member States varies greatly

They are still smaller than in other major economies

Stock market capitalisation

Stock market capitalisation (2013)*

Stock market capitalisation (as % of GDP) in 2013 in each EU28 country (*2012)

250

200

150

100

50

64.5%

138%

74%

94%

228%

87%

0EU US CN JP CH AU

* as % of GDP

2007: 85% of GDP

2013: 64.5% of GDP

1992: 21.7% of GDP

100

80

60

40

20

0

Banking and Finance

150

120

90

60

30

0AT

38% 38%

71%

9%

51%

10%

79%

84%81%

33%

75%

35%

98%

35%

15%13% 13%8%

4%

112%

121%

6%

125%

BE CY DE EE ES FI FREL IE IT LU MT NL PT SI SKBG

15%

CZ

71%

DK*

15%

HU

45%

LT LV PL RO UKSE*

CAPITAL MARKETS AND SMEs IN THE EU

Banking and Finance

A lot of SMEs don’t get all the financing they ask from banks in EuropeIn the euro area, 35% of SMEs didn’t get the complete financing they asked their banks for in 2013

SME

Greece

The Netherlands

Germany

Finland

67%

68% 19%

13%

35%SME

It is more costly for SMEs to get a loan from a bank than for bigger companies, especially in countries worst hit by the crisis

VSSME

€

% %

Access to credit information on SMEs isn’t generally available: this makes it both harder for the SMEs to receive capital market financing and difficult for investors to invest in SMEsAround 25% of all companies and around 75% of owner-managed companies do not have a credit score

€i? Securitisation of SMEs’ loans in the EU is half the pre-crisis level

€50

60

70

80

2007 2014

€36 billion

€77 billion

40

30

20

10

0

VENTURE CAPITAL MARKETS IN THE EUThe venture capital market is about five times bigger in the US than in the EU (in terms of amounts invested)

1X

5X

Private funds are providing less money to venture capital in the EU than before the crisis

In 2007, 15% of VC funds came from public moneyIn 2013, 40% of VC funds came from public money

2007 2013

15% 40%

Banking and Finance

FINANCIAL MARKETS FOR INVESTORS

Where does the average EU family invest its money?

Insurance and pension funds

Currency and deposits in banks

Bonds and quoted shares

0 5 10 15 20 25 30 35

2012

35%

33%

10%

Citizens buy financial products mainly in their home country

94% of Europeans say they have never bought a financial product

outside their own country

They don’t buy financial products in other EU countries because:

80% of Europeans say they would not consider buying a financial

product outside their own country

94% 80%

No clear information Lack of knowledge of their rights Language barrier

21% 18% 17%

Banking and Finance

GOALS OF CAPITAL MARKETS UNION

1. Create a single market for capital by removing barriers to cross-border investments

€

2. Improve access to financing for all businesses around Europe

Bonds

€€€€€

3. Diversify the funding of the economy and reduce the cost of raising capital

Jobs Growth

4. Maximise the benefits of capital markets so they can support economic growth and job creation

SME5. Help SMEs raise finance more easily

€

6. Help the EU to attract investments from all over the world and become more competitive

Banking and Finance