STRUCTURE OF THE FUTURE

Currently, there are more than 1,600 banks with average total assets of around €5.2 billion
each (€4.0 billion in 2006). How will the different market scenarios affect incumbents? For both
scenarios, we predict a significant decrease in the number of players engaging in sustainable
business models. This sharp decline is a result of inevitable investment needs ahead .

We expect the number of remaining market participants to shrink to no more than 150 to 300
players, depending on the scenario. Changing customer behaviour and new competitors
are just part of the reasoning; smaller institutions are also facing the challenge to provide
sufficient financial and personnel resources to cope with the necessary strategic business
model decisions – a prerequisite to making these investments successful. For private banks,
the trend to form larger institutions will mean that cross-border mergers will remain a relevant
option.

Looking at the public and cooperative sectors, this implies that banks are coming
under increased pressure to act as a single, large entity within their respective pillars.