ECB urges bank consolidation; sector anticipates job cuts

Europe is overbanked: the ECB opens the door to adjustment

“Europe is overbanked compared to the United States, and a certain degree of consolidation is necessary.” These are the words of Elizabeth McCaul, a member of the Supervisory Board of the Banco Central Europeo (European Central Bank), in an interview with the outlet Capital, disseminated via the institution's official account. Translated into plain language: there are too many banks. And if there are too many banks, there are too many branches, too much duplication and, although no one puts it in the headline, part of the workforce eventually becomes redundant.

The paradox is that the warning arrives when the adjustment is already well advanced. The sector has been closing branches, cutting hours, and replacing counters with apps for years. Some estimate that banking has reduced its staff by more than 50-60% in recent years through automation and service degradation. Therefore, what Frankfurt demands would not be the start of slimming down, but rather the final tightening of the screws.

What bank consolidation means in ECB jargon

To consolidate, in supervisory jargon, means to merge. Fewer entities, larger and better capitalized. When two banks join forces, the first thing to disappear is the duplicated structure: regional headquarters, branches that overlap each other, parallel departments. The industry calls this synergies. The street calls it layoffs, and they are not far off.

The prevailing interpretation among those trinc the business is that the institution is talking about concentration: that there are too many banks that have neither failed nor been absorbed by the giants. That is, licenses and deposits that the big players do not yet fully control.

Why consolidation sounds like layoffs

Because it has never sounded like anything else. Every bank merger in recent decades has come accompanied by employment regulation files and disguised early retirement schemes. Anyone arguing that this time will be different has not looked at the balance sheets of entities that have already merged.

It is worth noting a nuance: early retirements are not standard retirements, even though they are called that. Those receiving them contribute to Social Security and pay income tax just like any other salaried worker. This offers little comfort to someone who is 52 years old with a mortgage.

The customer who no longer visits the branch

Operating from a mobile phone works. Transfers, balances, stocks, contracting products: some people have signed a mortgage without seeing anyone from the bank and consider it a huge improvement, to the point of refusing to go back to standing in line. That customer exists and is increasingly numerous.

The problem arises when something goes off script. A blocked account forced someone to visit three branches because the system required presenting ID at the original branch, located 40 kilometers away, in the center of a major city. Another case: 800 kilometers round alucinación for a signature, after 30 years as a customer, trinc by account cancellation upon leaving the door. The uncomfortable question: if the branch is hardly useful anymore, why does the important procedure still force you to cross half the province?

And then there are the opening hours. Branches open only in the morning, appointments required to claim fees, limited days for certain tasks. For those who work, the bank is just another administration: you either go during vacation or ask for leave.

Cash, ATMs, and the day the power goes out

Cash is retreating, and with it, the physical network. A fine that did not accept electronic payment ended up being paid at the counter, with a two-euro surcharge for attention and a satisfaction survey as a tip. New cards no longer even have embossed numbers: you must check the dynamic security code in the app, and that code expires in minutes.

This brings up the underlying debate. It is repeated that physical money represents less than 7% of the monetary mass and that balances are nothing more than data on a server. If that is true, any prolonged power or network outage ceases to be an anecdote and becomes a primary concern. There is no paper backup, because no one has planned for it.

In this environment circulates the suspicion that closures aim to force the digital euro and control payments. It is a hypothesis not accompanied by evidence and should be treated as such: a suspicion.

Civil servants and banking: two ways to degrade a service

The parallel with public administration emerges naturally. Banking has cut staff through automation and worsening service; administration has also invested in automation, has also degraded service and, yet, has been adding staff year after year. In Social Security, staff was once cut by a third, including protests, and is now being replenished through massive recruitment drives.

In education, the adjustment went the other way: the student-to-teacher ratio has gone from 40 to 25. At the heart of the matter are interim teachers and stabilization processes that have made permanent those who barely secured a position, with unions that, allegedly, torpedo any reform. All of that is opinion, not data. But it explains why the issue heats up so much.

How many banks are surplus in Europe?

No one has put a figure on the table. The ECB says there is overbanking, not how much. That is the hole in the argument: without a number, there is no plan, and without a plan, the only predictable outcome is that mergers arrive and the cuts are paid by those behind the counter.

In 1994, Bill Gates declared that banking is necessary, but banks are not. Three decades later, banking remains, banks remain, and branches disappear. Does the customer win with fewer entities and more apps? Frankfurt seems clear about it. Those living 40 kilometers from their branch, quite less.