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Cost-cutting European Banks Fail to See Efficiency Gains

In spite of the sustained effort European banks are making to reduce costs, their key measure of efficiency has continued to worsen since the global financial crisis, S&P Global Market Intelligence data shows.

Persistently low interest rates and poor economic growth are serving to constrain income, while investments in compliance and other back-office roles and charges to resolve historical allegations of misconduct have helped offset cost-cutting efforts including branch closures, sweeping layoffs and pushing customers to digital options.

Across a sample of 15 of Europe’s largest banks by total assets, third-quarter cost-to-income ratios declined year over year at just six, according to S&P Global Market Intelligence data. Relative to the second quarter, 10 of the 15 saw cost-to-income ratios grow.

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Next Finance , December 2016

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