Subsidiaries of third-country banking groups held 10.17% of total European Union banking assets as of December 2023, with their presence most pronounced in the derivatives market, the European Banking Authority reported on 3 April 2025.
Of the 165 non-EU banking groups analysed in the report, 31 were domiciled in Luxembourg, comprising nine Swiss, seven Chinese and five Japanese entities.
Market share in derivatives and fee-based services
According to two EBA reports published on the same date, the 165 EU subsidiaries of non-EU banking groups for a significant share of specific financial activities, particularly derivatives, where their market share reached 33.73%. Their footprint was less pronounced in loans and debt securities, representing 8.17% and 6.06% of those markets respectively.
The EBA found that over 70% of loans and derivatives by these entities were granted to counterparties located outside their home countries. The subsidiaries’ asset exposures were mainly directed towards credit institutions and other financial corporations in the EU, accounting for 30.79% and 22.44% of total counterparty assets respectively.
In total, 78% of the assets held by these subsidiaries were related to banks, credit institutions and other financial corporations, with 80% of those assets located outside the jurisdiction where the subsidiaries were domiciled.
Non-interest revenue sources
In terms of profit and loss items, the market share of these subsidiaries amounted to 5.16% of total interest income and 1.85% of dividend income. Their role was more pronounced in non-interest revenue streams, comprising 12.22% of fee and commission income and 32.28% of other operating income.
The EBA noted particularly high market shares in fee income from commodities (77.34%), fiduciary transactions (48.74%), central administrative services for collective investment (30.57%), corporate finance (30.19%), custody services (25.68%) and foreign exchange operations (19.73%).
Regarding the assets involved in service provision, the EBA reported substantial market shares held by these subsidiaries in central administrative services for collective investment (53.11%), fiduciary transactions (28.87%) and custody assets (20.55%).
Foreign currency exposure
In a separate analysis, the EBA the foreign currency exposures of EU/EEA banks. Nearly 30% of their exposures were in foreign currencies as of December 2023, with 21% of total funding also denominated in foreign currencies. This figure excluded funding from foreign subsidiaries of EU banks. Foreign currency funding consisted of 4% in euro, 1.9% in other EEA currencies and 14.7% in other foreign currencies. The US dollar was the largest contributor, making up 12% of total funding.
Wholesale markets and unsecured funding
The EBA also reported that EU/EEA banks primarily relied on wholesale funding markets for foreign currency funding. Two-thirds of such funding was unsecured, followed by repurchase agreements, which comprised 13%. Financial customers were the main source of unsecured foreign currency funding, whilst non-financial customers accounted for less than one third.
Net stable funding ratio
With regard to the net stable funding ratio (NSFR), the EBA concluded that EU banks maintained buffers comfortably above the minimum regulatory requirement both overall and in significant currencies. The average NSFR for foreign currencies was below 100% only in Norwegian krone and Japanese yen. The average NSFR in US dollars rose to 107.2% by December 2023, up from 83% in June 2021. However, 60 out of the 267 banks reporting the US dollar as a significant currency still recorded an NSFR below the 100% threshold.