EU banks must be bigger, have deeper capital market, to compete with US, say top EU officials
European banks require greater size and deeper capital markets to compete with US institutions, according to senior European officials gathered in Dublin. A European Commission report advocates for reduced political intervention in bank mergers and the removal of cross-border banking barriers. European Central Bank VP Boris Vujcic emphasized that while EU banks match US counterparts in liquidity, capitalization, profitability, and efficiency, they trail behind in trading and post-trading activities.
Scale is crucial in these areas, Vujcic noted. A notable instance of political interference in a bank merger occurred in June when Germany rejected UniCredit's bid for Commerzbank. Euro zone finance ministers chair Kyriakos Pierrakakis stressed the need for European banking champions capable of competing globally, citing a significant IT investment gap between US and European banks.
Vujcic opposed lower capital requirements, advocating for the completion of the banking union and savings and investments union to create a truly integrated financial market and reduce fragmentation caused by differing tax regimes, rules, and legal systems.
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