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PR(07)45: The EFTA Surveillance Authority publishes its interim report on retail banking in the EFTA States


The EFTA Surveillance Authority has today published its Report on the preliminary findings of its sector inquiry into the retail banking payments markets in the three EFTA States (Iceland, Liechtenstein and Norway). This Report, which chiefly focuses on the Icelandic and Norwegian markets, constitutes the second phase in the Authority’s inquiry into the retail financial services markets in the EFTA States, phase one having consisted of an examination of card payments markets (see PR(07)27).

Well-functioning, integrated and competitive financial markets are essential for the efficient and dynamic development of the EEA. However, despite measures taken to integrate the financial markets within the EEA, retail banking markets in particular have continued to show a lack of integration. Retail banking activity is commonly understood to comprise banking services for individuals and households, as well as for small and medium-sized enterprises.

Both the Icelandic and Norwegian markets are characterised by long banking relationships between customers and banks. Across the EEA, customers tend to switch banks infrequently, and customer mobility in Iceland and Norway is low even compared to the rest of the EEA. In both countries, practices such as cross-selling (the selling of additional products and services to existing customers) and tying (requiring the customer to buy one product in order to obtain another) are common in relation to various banking products.

The Authority’s and the Commission’s findings together demonstrate that the manner in which customers use their bank accounts varies significantly across the EEA. This is in no little part influenced by high variations in prices for different payment services from country to country. The reason why this high degree of fragmentation remains in place within the EEA is not least due to a range of entry barriers. Such barriers may both be due to "natural effects" such as economies of scale, but may also be of an artificial nature, such as discriminatory access to networks or market foreclosure due to co-operation between banks already on the market.

The publication of this Preliminary Report opens a consultation period, during which the Authority invites comments from public authorities, the industry, customers and third parties. Comments are requested before 20 December 2007. Following the receipt of comments, the Authority envisages to publish a final report on retail financial services in the EFTA States. On the basis of that document, the Authority will evaluate whether there are grounds for further actions on its behalf in order to address competition problems identified in the report.

For further information, please contact:

Mr. Hrafnkell Óskarsson
Senior Officer, Competition & State Aid Directorate
Tel. (+32)(0)2 286 18 55; or

Mr. Kjell-Arild Rein
Temporary Officer, Competition & State Aid Directorate
Tel. (+32)(0)2 286 18 86

21 November 2007

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