A sign outside a BNP Paribas SA bank branch in Paris, France, on Friday, August 2, 2024.
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France BNP Paribas said Thursday that there are simply too many European lenders for the region to compete with rivals from the US and Asia, and called for the creation of more domestic heavyweight banking champions.
BNP Paribas Chief Financial Officer Lars Machenil expressed support for greater integration in the European banking sector in a speech to CNBC’s Charlotte Reed at the Bank of America Financials CEO Conference.
His comments come as Italy’s UniCredit ups the ante on its apparent takeover attempt of Germany’s Commerzbank, while Spain’s BBVA continues to actively pursue its domestic rival, Banco Sabadell.
“If I were to ask you how many banks there are in Europe, your correct answer would be too many,” Machenil said.
“If we are very fragmented in operations, the competition is not the same as what you might see in other regions. So… you should actually do that consolidation and get that going,” he added.
Milan-based UniCredit has increased pressure on Frankfurt-based Commerzbank in recent weeks as it aims to become the biggest investor in Germany’s second-largest lender with a 21% stake.
UniCredit, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-dollar merger.
German Chancellor Olaf Scholz, who has previously called for greater integration in the European banking sector, has strongly opposed the apparent takeover attempt. Scholz reportedly described UniCredit’s action as an “unfriendly” and “hostile” attack.
Germany’s position on the UniCredit takeover has prompted some to accuse Berlin of favoring European banking integration only on its own terms.
Domestic consolidation
BNP Paribas’ Machenil said that while domestic consolidation would help stabilize uncertainty in the European banking environment, cross-border integration was “still a bit further away”, citing different systems and products.
Asked if this meant he believed cross-border bank mergers in Europe seemed a far-fetched reality, Machenil replied: “They are two different things.”
“I think those that are in a country make economic sense, and should happen economically,” he continued. “If you really look across borders. So a bank that is only established in one country and only in another country, that doesn’t make economic sense because there are no synergies.”
Earlier this year, Spanish bank BBVA 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 BBVA is highly unlikely to succeed with its multi-billion euro hostile bid. Reuters reported this. And yet Onur Genç, CEO of BBVA, told CNBC on Wednesday that the acquisition “went according to plan.”
Spanish authorities, who have the power to block any bank merger or takeover, have done just that have expressed their opposition on BBVA’s hostile takeover bid, citing potentially damaging consequences for the province’s financial system.