The market share of EU subsidiaries of third country banking groups remains stable at 9.8% of total assets

The European Banking Authority (EBA) today published two Reports on the market share of subsidiaries of non-EU banks in the EU, as well as on EU banks’ assets and liabilities in foreign currencies. The market share of EU subsidiaries of third country banking groups amounts to 9.8% of total assets as of December 2023 (down from 10.17% a year earlier). The Report indicates that EU/EEA banks currently hold nearly 32% of their exposures in foreign currencies and receive 21.1% of their total funding in foreign currencies. This marks an upward trend since December 2023.

As of December 2024, third-country players held 9.8% of total assets in the market. Their presence was more pronounced in specific segments, accounting for 29% of derivatives, 8% of loans, and 6% of debt securities. This represents a slight decline from December 2023, when their overall market share stood at 10.2%, primarily driven by reduced shares in loans and derivatives. The decrease was particularly notable among subsidiaries controlled by entities domiciled in the United States and the United Kingdom. In contrast, the market share remained stable for entities linked to China and increased for those associated with Japan and Switzerland.

As of December 2024, subsidiaries of third-country banking groups reported that two-thirds of their total assets were held in products towards credit institutions and other financial corporations. Additionally, 86% of the total reported assets were located outside the jurisdiction in which the subsidiaries themselves were domiciled, highlighting the international footprint of their business models.

In relation to the P&L items, the market share of subsidiaries of third country banking groups represented 6% of interest income, 2% of dividend income, 10% of fee and commission income and 12% of other operating income. Subsidiaries of third country banking groups enjoyed a high market share on fee income originating from commodities (65%), fiduciary transactions (48%), central bank administrative services for collective investment (30%), corporate finance (29%), custody (24%) and foreign exchange (19%).

The Reports also show that EU/EEA banks hold nearly 32% of their exposures in foreign currencies, while they receive 21.1% of total funding in foreign currencies (up from 28.4% and 20.5% as of December 2023, respectively). Out of this, funding in US dollar represents 23% of total exposures and 13.1% of total funding (up from 19.3% and 12.4%, respectively, as of December 2023).

Unsecured wholesale and repo funding represent more than 75% of funding denominated in all foreign currencies. On a yearly basis until December 2024, the share of US dollar funding increased the most for repo and unsecured wholesale funding, reaching 28% for repo funding and 18.3% for unsecured wholesale funding. The individual reporting data shows a lower US dollar funding reliance in repos, ABS and retail funding. This indicates that EU/EEA banks use the subsidiaries for obtaining repo funding and retail funding denominated in foreign currencies.

On net stable funding ratio (NSFR), EU banks’ buffers remain comfortably above the minimum requirement both for the total NSFR ratio and for the NSFR in the main significant currencies, with the only exception of Norwegian krone and Japanese yen.

Note to the editors

1. The identification of non-EU entities and operators was made based on the country of domicile of the ultimate parent.
2. The EBA relied on different data sources to carry out the analyses included in the Reports. The analysis on funding structure and assets and liabilities in foreign currency is based on EBA supervisory reporting data. The investigation of the market share relies mainly on FINREP templates, available at the EBA for banking groups (i.e. institutions that report on a consolidated basis). However, only a limited number of subsidiaries of third country banking groups have established a banking group in the EU and report on a consolidated basis, while the majority of the subsidiaries operate on a solo basis and report FINREP individual templates.