European Banking Authority reports non-EU bank subsidiaries account for 10.17% of EU assets and EU banks fund 21% in foreign currencies

The European Banking Authority published two reports analysing the footprint of EU subsidiaries of third-country banking groups and EU/EEA banks’ assets, liabilities and funding in foreign currencies. As of December 2023, EU subsidiaries of non-EU banks held 10.17% of total EU assets, with a much higher presence in derivatives, while EU/EEA banks held nearly 30% of exposures in foreign currencies and received 21% of total funding in foreign currencies. Third-country subsidiaries accounted for 33.73% of derivatives, 8.17% of loans and 6.06% of debt securities, and more than 70% of their loans and derivatives were granted to counterparties domiciled outside the subsidiary’s home country. Their market share was driven largely by exposures to credit institutions and other financial corporations in the EU, and these two counterparty types represented 78% of third-country subsidiaries’ total assets, with 80% of those assets located outside the country where the subsidiaries were domiciled. On income, these subsidiaries represented 12.22% of fee and commission income and 32.28% of other operating income, with particularly high fee-income shares in commodities (77.34%) and fiduciary transactions (48.74%). For EU/EEA banks’ foreign currency funding, the US dollar was the main contributor to “other foreign currencies” (12% of total funding), unsecured wholesale funding accounted for around two thirds of total foreign currency funding, and the average net stable funding ratio in USD was 107.2% while remaining below 100% for 60 of the 267 banks reporting USD as a significant currency.