Article at a glance:

European banks: Old assets, new profits

Securitization—the practice of repackaging cash flows from assets as tradable securities—is a fast-growing market in Europe, but profits are proving elusive. Although revenues have grown steadily, most banks offer too much, providing securitization services across all major asset classes and European regions. Their operations are too large, and individual banks haven't developed innovative services that would set them apart from their competitors.

The take-away

Few banks will want to exit the securitization market this early in the game, but most need to change tack. They should choose between becoming niche product specialists, on the one hand, and reducing their costs by repackaging internally generated assets, such as mortgages and commercial loans, on the other.