Sign outside the BNP Paribas branch on Friday, August 2, 2024 in Paris, France.
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French BNP Paribas There are too many European banks in the region to compete with U.S. and Asian rivals, it said on Thursday, calling for the creation of more local heavyweight banking champions.
Lars Machenil, chief financial officer of BNP Paribas, expressed support for further integration of the European banking industry in an interview with CNBC reporter Charlotte Reed at the Bank of America Financial CEO Conference.
His comments come as Italy’s UniCredit ups the ante on an apparent takeover attempt by Germany’s Commerzbank, while Spain’s BBVA continues its aggressive bid for domestic rival Sabadell Bank (Banco Sabadell).
“If I asked you how many banks there are in Europe, your correct answer would be too many,” Mechenier said.
“If our activities are very fragmented, the competition is not the same as what you see in other regions. So … you should basically consolidate and carry on,” he added.
In recent weeks, Milan-based UniCredit has stepped up pressure on Frankfurt-based Commerzbank as it seeks to become the largest investor in Germany’s second-largest bank, taking a 21% stake.
Earlier this month, UniCredit took a 9% stake in Commerzbank, a merger that could cost billions of euros and seemed to catch German authorities off guard.
German Chancellor Olaf Scholz, who has previously called for further integration of Europe’s banking sector, has firmly opposed this apparent takeover attempt. Scholz reportedly described UniCredit’s actions as an “unfriendly” and “hostile” attack.
Germany’s stance on the attack on UniCredit has prompted some to accuse Berlin of supporting European banking integration only on its own terms.
Domestic LCL
BNP Paribas’ Marchenier said that while domestic consolidation would help stabilize an uncertain European banking environment, cross-border consolidation was “somewhat distant”, citing differences in systems and products.
Asked whether this reflected the reality that he believed cross-border bank mergers in Europe seemed far-fetched, Marchenier responded: “Those are two different things.”
“I think in a country, from an economic point of view, these things make sense, and from an economic point of view, they should happen,” he continued. “When you think about truly cross-border business. So a bank that’s only in one country and only in another country, it doesn’t make economic sense because there are no synergies.”
Earlier this year, Spanish bank BBVA It shocked markets when it launched an all-share takeover bid for domestic rival Banco Sabadell.
The head of Banco Sabadell said earlier this month that a multi-billion-euro hostile takeover bid by BBVA was unlikely to succeed. Reuters reports. However, BBVA CEO Onur Genç told CNBC on Wednesday that the acquisition is proceeding “as planned.”
Spanish authorities have the power to block any merger or acquisition of banks expressed their opposition Spanish bank BBVA’s hostile takeover bid, saying it could have harmful effects on the county’s financial system.
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