European Central Bank President Christine Lagarde reinforced her support for international banking tie-ups in the eurozone, saying they can produce many upsides, including a greater ability to compete with foreign rivals.
Asked about a potential takeover of Commerzbank by UniCredit, Lagarde told lawmakers in the European Parliament that if such steps produce larger and more agile institutions, they can have “lots of benefits.”
“Banks that can actually compete at a scale, at a depth and at the range with other institutions around the world, including the American banks and the Chinese banks, is, in my view, desirable,” she said, adding that this wasn’t a comment on any specific transaction.
UniCredit has secured a 21% holding in Commerzbank and said a full takeover is an option – but that idea has run into staunch opposition from the German government. A move by the Italian bank to increase that stake would need the approval of Lagarde and the Governing Council of the ECB, which oversees lenders via the Single Supervisory Mechanism (SSM).
“Our role is limited from a supervision point of view, and that’s the job of the SSM to determine on the basis of this qualifying holding, whether the rules are respected and whether the criteria are satisfied – and that will be done if and when necessary,” she said, adding that the ECB “will do its job in verifying the proposal that will be put to it.”
German officials have said they’d prefer for the Frankfurt-based lender to remain independent, partly because it’s seen as an important source of funding for the domestic economy.
“Any attempt to enlarge, deepen, strengthen European banks will be beneficial – bearing in mind that not all mergers are fine, and that there are liabilities, that there are risks that need to be considered in the process and that need to be considered by the stakeholders,” Lagarde said. BLOOMBERG
