World Stock Watch

European Banking Leaders Anticipate Mergers and Acquisitions Boom

As the new Trump administration takes shape, European banking leaders are optimistic about a surge in mergers and acquisitions on the continent. This comes as the US is expected to see an increase in deal-making activity.

Too Many Banks in Europe

Steven van Rijswijk, CEO of ING, the largest bank in the Netherlands, believes that the European Union’s financial system is plagued by inefficiencies due to the sheer number of banks. “I think there are too many banks in Europe for an efficient capital system,” he stated.

Speculation Surrounds UniCredit and Commerzbank Merger

The potential merger between UniCredit, the sixth-largest bank in Europe, and Commerzbank, Germany’s second-largest bank, has sparked intense speculation. If approved, it would be one of the largest cross-border deals in European banking in years. However, the deal faces political headwinds.

Over-Regulation Hinders Efficiency

Banking CEOs have criticized EU regulators for over-regulation, which they claim hampers global competition. Van Rijswijk noted that fragmented laws across Europe hinder a more efficient banking system, unlike the US.

Consolidation Within Individual Markets

Van Rijswijk predicts that consolidation will occur within individual markets due to compartmentalization of regulation. Sergio Ermotti, CEO of Swiss bank UBS, agrees, suggesting that US authorities will allow consolidation among smaller banks, creating opportunities.

Rationalization of Regulation

Ermotti believes that regulators will rationalize existing rules rather than watering them down. José Viñals, chair of Standard Chartered, hopes for “thoughtful” deregulation in Europe, while Adena Friedman, CEO of Nasdaq, advocates for a unified regulatory framework for capital, similar to the US.

A Call for Change

Friedman emphasizes that Europe must decide which elements of society and community require national or regional regulation. “You’ve got national regulation and regional regulation. That has got to change,” she said.