Europe needs bigger banks but mergers hard without banking union -Intesa CEO
Reuters
Published Nov 06, 2023 13:46
MILAN (Reuters) - European banks need to join forces if the region is to withstand competition from the United States and China but without a banking union, cross-border mergers do not make sense, the head of Italy's biggest bank Intesa Sanpaolo (BIT:ISP) said on Monday.
Speaking to CNBC television, Carlo Messina said it was currently hard to achieve the cost savings that investors expect a merger to produce in the case of a cross-border transaction, noting that they would want to see an increase in dividends and earnings per share.
"You need synergies and the area where investors are looking for synergies is cost," he said, adding it was not easy "to deliver real cross-border synergies on the cost side".
"I think we'll need to wait for a banking union to see real, significant cross-border consolidation. But we need to do it otherwise Europe will remain an insignificant group of countries," he said.
Echoing comments by Andrea Orcel, the CEO of Italy's second-biggest bank UniCredit (LON:0RLS), Messina said large banks were necessary to support the bloc's economy.
Orcel last month said Europe was destined to "irrelevance" if it did not work to unify its capital markets and create a banking union that allowed lenders to compete with U.S. rivals and adequately finance the region's economy.
Messina said it would be easy for Intesa (LON:0HBC) to achieve cost savings if it expanded domestically, but it ran into antitrust issues after acquiring smaller rival UBI in 2020-2021.
Intesa has a 30% market share of deposits and mutual funds, and 20% of insurance products, the CEO said.
"We have a significant antitrust problem, so this will probably make it impossible for us to do acquisitions in Italy, other banks can try," Messina said.
He added that Intesa had been one of the "very few" European lenders in recent years to heed calls for consolidation from the European Central Bank's Chief Supervisor Andrea Enria.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.