The Role of Financial Conglomerates in the Globalization of Financial Services: Regulatory Complexities and the European Perspective

The industry seems naturally to converge on an organizational structure that combines as many benefits and opportunities as possible. This is most clearly the case with the structure of a financial conglomerate1 where, for instance, banking or investment activities are combined with insurance activities, usually spread over different jurisdictions around the globe. Financial conglomerates have emerged through the wave of mergers and acquisitions in the 1990s, and the trend has been picked up again in the aftermath of the equity market decline at the turn of the twenty-first century. The highly fragmented nature of the European insurance market—coupled with improved economic conditions and low interest rates—has formed the main drivers for such a development.2 The financial crisis could have changed the prospects of financial conglomerates, in view of the problems and reorganizations encountered with some of those institutions (e.g., Fortis, Erste Bank). However, many conglomerates have weathered the financial crisis relatively well and are already preparing for a strong revival.