F13,

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The implementation of the EC′s programme to liberalise the financial services sector as part of the movement towards a Single European Market will significantly reduce the costs of entry into non‐domestic markets for Community banks. Reducing entry costs will increase competition in banking markets, but it is unlikely that all segments of the banking market will experience the same patterns of change. The large‐scale corporate market already displays a high volume of cross‐border trade, while retail markets may be inaccessible for many non‐domestic banks, except by acquisition. The small‐ and medium‐sized corporate sector is widely regarded as an attractive niche market at the European level and it is suggested that there are particular gaps in this market in the UK. These gaps may make such a market susceptible to increased competition from non‐UK Community banks, although at the same time, improvements in the product offerings to this market by UK banks may provide the basis for a strategy to protect existing domestic markets and develop into new non‐domestic markets.

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