Survey Finds U.S. Long on Banks but Short on Branches

LONDON - The United States is oversupplied with banking companies but is significantly underbranched compared with most other developed countries, according to a survey reported here.

The average U.S. branch serves just over 5,000 people. In Europe, penetration of consumer banking outlets is much higher, with a branch for as few as every 844 people in Switzerland, the survey showed.

DRT International, an international accounting and consulting firm, conducted the survey.

Only Japan, with its high population density, outstrips America, with each branch serving 8,600 people.

Among other nations, Germany has a score of 3,160 people for each branch, Britain 3,740, and France nearly 4,000.

People per Company

By contrast, the United States ranks high in the number of individual banks and savings institutions, measured against total population.

This works out to 19,750 people for each U.S. banking company. In Japan the equivalent figure is 797,200.

Only the Netherlands and Switzerland have fewer people per bank - 14,500.

Germany has about 80,800 people for every bank, Britain 105,000, and France 87,700.

Effect of Consolidation

Thus, the merger activity now under way in the United States will continue but that this activity "should have little effect on the number of outlets available to customers."

The DRT research was based on a survey of banking, insurance, and securities companies in 11 countries to assess key business issues for the coming decade.

While it is an established principle that successful service companies place their customer as their No. 1 priority, the majority of financial services companies do not appear to have learned this lesson, they said, DRT analysts said.

A Warning to Banks

"Companies that persist in putting their own problems ahead of those of their clients will soon find they have more problems than customers, more costs than profits," DRT analysts said.

Most executives - 70% - named the earnings squeeze as the dominant issue facing their institutions.

Increased competition and overcapacity, due in part to deregulation, were most often named as responsible.

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