Position in the commercial banking market

• Survey of Nordic competition authorities
• The Competition Authority's priorities
• Concentration in the Icelandic banking market is very high. The same applies to the other Nordic countries.
• No foreign bank operates in Iceland.
• The interest rate spread is greater in Iceland than in the other Nordic countries.
• Ownership of Icelandic payment systems and card companies is highly intertwined.
• Customers of the banks do not switch banks. Therefore, their so-called mobility is very low.
• The Competition Authority considers it necessary that measures be taken to increase the mobility of bank customers, as this is an important prerequisite for increased effective competition in the market.
• The Competition Authority considers it necessary to address the barriers to entry for the banks' payment systems and the joint ownership of banks and savings banks of the payment card companies.

Financial activity plays an important role in the economy of every nation. It plays a crucial role for activity in other markets and in the economic system as a whole. Banking activities promote and stimulate trade in goods and services, which is intended to lead to lower transaction costs for the benefit of society. Therefore, it is fundamental that competition is active in the financial market and that the market is as efficient as possible. A lack of competition in banking services harms consumers. This is reflected in high prices, a lack of innovation and an inefficient financial market. Therefore, financial services are among the business sectors on which the Competition Authority places a primary focus in its activities. In the autumn of 2005, the competition authorities in the Nordic countries decided to investigate and identify potential competition problems in the retail banking market in the countries. The aim was to publish a report on the findings and make recommendations for improvement where deemed necessary. It was decided to examine the following issues in particular:

1. Developments and consolidation in the Nordic banking market from 1995 to 2004, with particular regard to services for households and small and medium-sized enterprises.
2. Access for new banks to payment systems that are necessary for general banking activities.
3. The structure of the countries' payment card market.
4. Customer mobility between commercial banks, i.e. the extent to which customers move their business between banks.

See all the press release in PDF format.
Slides regarding a press conference.
The report.