13.7.1 Why are these characteristics relevant?

Many restructuring plans include the commitment to reduce the market presence of the beneficiary bank. This can be achieved by reducing the number of branches and the number of employees. Several decisions indicate that in parallel to the balance sheet reduction, the bank will shrink in terms of branches and headcount.1 From this perspective, the reduction of the number of branches and employees is a compensatory measure (i.e. a measure to limit distortions of competition).

It should, however, be noted that the reduction of the number of branches and employees is not purely a compensatory measure; it is also a viability-measure and an own contribution-measure. The reduction of the number of branches is sometimes referred to as an ‘optimization of the branch network’.2 It can be a way to increase operational efficiency. In this sense, it is a cost-cutting measure (which improves the profitability – and thus the viability – of the bank).3 At the same time, it constitutes an own contribution from the bank.

In the same vein, a reduction of the number of employees results in a reduction of the labour costs. In this sense, it is a cost-cutting measure, and thus a viability-measure and an own contribution measure. In the sense that a reduction of the number of employees contributes to reducing the market presence of the bank, it is a compensatory measure.