Belgian banks’ performance over the last 10 years...
How have Belgium’s banks been performing lately? To answer this question, Vlerick’s Centre for Financial Services undertook a study to develop a scorecard for assessing bank performance in the Belgian banking industry.*
The big banks need to reinvent themselves.
Prof André Thibeault, Vlerick Centre for Financial Services, Vlerick Business School
In collaboration with Vlerick Prime Foundation Partner KPMG, Vlerick’s Prof André Thibeault, Corneel Defrancq and Jessie Vantieghem conducted a large research project to study the financial sector in Belgium from 2001 - 2010. The goal of the study was to develop a scorecard for assessing the Belgian banks’ performance. The researchers used a multi-factors approach to make sure performance was assessed under 3 different dimensions: the value chain, the financial performance (breakdown of the ROE), and the risk-return trade-off.
These performance measures were applied to 4 different segments of the Belgian banking landscape, based on the size of the banks (defined by their total assets) or based on their type of activities or revenues:
- The first segment compares the banks relative to the source of their income as defined by the ECB (investment banks or universal banks).
- The second segment is based on the size of the banks (total assets).
- The third segment studies Belgium’s Big Four banks individually: Dexia, Fortis, ING and KBC.
- The fourth segment is based on the BankScope segmentation.
Stated very briefly, here are some of the study’s findings:
- The first point of interest is the relative importance of the financial sector in Belgium’s economy. Its importance is substantial: more than 6% of the Gross Value Added to the Belgian economy in 2000 as well as in 2010.
- When looking more specifically to the Belgian banking sector, one clearly notices its international standing. In Belgium, almost half of the total assets held by Belgian financial institutions are in the hands of foreign-controlled credit institutions.
- One main conclusion of the study is that the banking sector in Belgium is highly concentrated with regard to total assets: in 2009, the 4 big banks accounted for almost 90% of the total assets of the Belgian banking sector.
- When examining bank size, the smallest banks perform best – but by virtue of the selected sample, they represent a very small portion of the banking sector.
* “A scorecard for bank performance: the Belgian Banking Industry”; Prof André Thibeault, Corneel Defrancq and Jessie Vantieghem - Vlerick Centre for Financial Services.
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