i Measurement of Commercial Banks Performance in EU Countries: A Multi-Criteria Approach Christos Lemonakis PhD Candidate, Department of Production Engineering and Management, Technical University of Crete, 73100 Chania, Greece culemon2004@yahoo.gr Ioannis Strikos MSc in Business Economics, Finance and Banking, Department of Economics, University of Portsmouth, Portland Street, PO1 3D3 Portsmouth, UK. avsecon@hotmail.com Constantin Zopounidis Prof. at the Department of Production Engineering and Management, Technical University of Crete, Financial Engineering Laboratory, 73100 Chania, Greece, kostas@dpem.tuc.gr Abstract The European Banking sector has undergone significant changes over the last few years. Taking into account the current legislative framework of the Second Banking Directive for the enhancement of stability in the financial system as well as the new reformed economic environment after the outburst of the 2007 financial crisis in the American banking sector and its contagious effects around the world, the aim of this paper is to evaluate the recent performance and efficiency of commercial banks operating in the 15 EU countries over the period 2005-2009. The analysis draws upon a multicriteria decision aid approach and a number of bank-specific characteristics collected annually from the consolidated financial statements of a sample of 162 European Commercial banks. First, this study examines the performance of the national banking sectors’ in t he areas of asset quality, capital structure, cost structure, liquidity and profitability. Then, the multicriteria Promethee methodology is utilized in order to rank the banks according to their performance over a set of multiple criteria, while the ranking result is used to provide a comparative analysis of their strong and weak points for each country separately. The results indicate that, despite the differences observed across the national banking sectors, the adverse macroeconomic and financial markets conditions have severely decreased the accounts of commercial banks in European Union and have negatively affected the majority of their financial indices. In addition, the financial crisis has had a significant effect on cross-border activities, including intermediation and merger and acquisition (M&A) activity. The decline nevertheless came to a halt in 2009, and there is reason to believe that these activities will pick up again quickly once economic growth resumes. However, concerning the current situation of European banks, the outlook still remains uncertain and therefore it is of high importance for both bank managers and regulatory authorities to take further actions in order to enhance stability and ensure that commercial banks will be able to mitigate the impact of possible future shocks. Keywords: European Commercial Banks, Financial Ratio Analysis, Multicriteria Decision Aid Methodology, Performance, Ranking.