European Central Bank Member Calls for Easier Cross-Border Bank Mergers

European Central Bank (ECB) governing council member Françoise Villeroy de Galhau reportedly said Wednesday (May 29) that mergers of banks in different European countries should be no harder than those between banks in the same country.

Currently, banking markets in the region are drawn along national lines even though the European Union (EU) has centralized the regulation and supervision of banks, Reuters reported Wednesday.

“It would be desirable, logic and normal that cross-border mergers within a monetary union would be as simple and accessible as a merger (within the same country),” Villeroy said in the report.

Villeroy’s comments come about two weeks after French President Emmanuel Macron said that consolidation among European banks is necessary to bolster the EU’s economic prowess on the global stage.

Macron expressed openness to the prospect of a major French bank being acquired by an EU counterpart, underscoring his belief in the importance of deeper financial integration for the EU’s future prosperity.

“Dealing as Europeans means you need consolidation as Europeans,” Macron told Bloomberg in a report posted May 13.

Against the backdrop of geopolitical challenges, Macron has been advocating for his EU counterparts to embrace a comprehensive program of reforms aimed at fortifying the EU’s economic unity and strength.

In an earlier development around European banks, Claudia Buch, chair of the ECB’s Supervisory Board, said in February that lenders should beef up their plans for dealing with emerging risks.

“Many of the issues dominating today’s headlines were inconceivable a decade ago,” Buch said. “This underscores the need for banks not only to respond to emerging risks, but to anticipate them too.”

European banks are already dealing with the effects of war in Ukraine and the Middle East, and the advent of super-charged bank runs thanks to digital tech, and the ECB also wants these lenders to get a better handle on the risk of cyberattacks, rising interest rates, climate changes and a shift to a more sustainable economy.

“A holistic view of the new risk landscape requires the use of scenarios, improvements in data and measurement, and a close interaction between bank-level and macro-level analysis,” Buch said.