Banks are financial institutions whose core function is to collect deposits and issue loans. Through their action, they enable the smooth functioning of the economy. Under the influence of liberalization and increased competition on the financial market, banks are forced to improve their business models and the offer of their products or services. One of the ways to strengthen their position on the market or to survive on it is to carry out business integrations with other banks. The consolidation of banks in the European Union refers to processes of mergers or takeovers, and is motivated by regulatory changes, economic factors, competitive pressures and the need to increase profitability. Past crises encouraged regulatory bodies to revise existing and introduce new regulatory standards, implement stricter capital requirements and enhanced supervision and the establishment of resolution procedures for failed banks. Among other things, the aforementioned regulatory changes are one of the reasons why banks are turning to consolidation as a means of meeting new requirements and increasing their resistance to economic shocks. By integrating operations and eliminating duplicate functions, banks can reduce costs and improve their profitability. This is particularly important in the period after the financial crisis of 2008, when the prevailing environment was low interest rates and increased competition. The adverse effects of consolidation mainly relate to the high concentration of the banking systems of the EU member states and the creation of excessively large banks, which can undermine market competition and the stability of the financial system. Bank consolidation in the European Union varies across countries and regions due to pervasive differences in regulation, financial structure and economic conditions. In general, business integrations move in two directions: domestic integrations are dominant and cross-border integrations are less common. The contribution of the research part of the work is a systematic presentation and analysis of the banking system of the European Union and the Republic of Croatia, as well as an analysis of consolidation trends in order to gain an understanding of the motives for bank consolidation, trends over the last two decades, characteristics and consequences on bank operations, i.e. on their profitability.