Roland Berger defends mergers in the banking sector and creation of a large national bank – Banca & Finanças

A study on the main challenges for Portuguese banking in a post-pandemic period, carried out by the consultant Roland Berger, recommends mergers between the main national banks, to guarantee the viability of the sector.

The study, which characterizes the main levers that will condition the performance of Portuguese banks, also recommends “cost reduction on a large scale” and the creation of a large national bank.

In a note sent to the Lusa agency on Tuesday, the consultant says that Portuguese banks will face “a significant set” of challenges, which will require the transformation of their business models.

“Portuguese banking needs a strong disruptive transformation”, affirmed the president of Roland Berger Portugal, António Bernardo, quoted in the same note.

According to this study, national banking is currently characterized by an “excessive weight of default on its credit portfolio, an insufficient efficiency ratio and deterioration of the sector’s profitability to levels below the cost of capital, which creates major challenges to bank capitalization “.

In addition to a number of bank branches higher than the European average by 58%, national banking is also characterized by “reduced productivity of its employees, accumulation of excess liquidity and a reduced size of Portuguese banks vis-à-vis other markets”.

To face this scenario, and in order to guarantee the future of national banking, the study by Roland Berger Portugal points out several possible solutions, highlighting “the deepening of the consolidation process in the space of the largest Portuguese banks (where it is located, for example, Caixa Geral de Depósitos, Millennium bcp or Novo Banco), boosting the creation of a large national bank with assets worth 200 billion euros “.

“On the other hand, the medium-sized structure must be strengthened, with Crédito Agrícola being identified as a potential bank consolidator”, says the same note.

As an example of medium-sized banks that Crédito Agrícola could consolidate, Roland Berger points to Montepio or EuroBIC, reinforcing the structure of medium-sized banks, with assets between 80 and 120 billion euros.

The study carried out by Roland Berger, with the support of the global Competence Center for Financial Services, also points to consolidation movements among small banks that ensure a minimum of critical mass in the sector, reinforcing the structure of banks in the range between 10 and EUR 20 billion.

“Here too, some small banks may face long-term challenges if they do not grow, such as Eurobic or BNI Europa, and some (such as Abanca) may become consolidators and others will be consolidated”, says the same note.

However, the future of national banking, according to Roland Berger Portugal, will also have to undergo a “disruptive cost reduction”, with the closure of more than 1,500 branches (about 30%), accompanied by a “strong reduction of employees “and a review of the organizational structure, which would represent a 20% cost reduction.

Source: Jornal de Negócios by

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