Published On : 11/07/2023

Europe needs bigger banks but mergers hard without banking union -Intesa CEO

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 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, 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 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.

(Reporting by Valentina Za; Editing by Kirsten Donovan)

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.