BRUSSELS - Europe should seek to consolidate its banking sector into larger, pan-European institutions and pursue more cross-border mergers, Eurogroup President Kyriakos Pierrakakis said on Monday ahead of a gathering of euro-area finance ministers.
"We need European rather than national champions and yes, we need more cross-border M&As," Pierrakakis told reporters. He also serves as Greece's finance minister.
Pierrakakis' comments coincided with a high-profile acquisition attempt in the region: Italy's UniCredit SpA has been pursuing Germany's Commerzbank AG. According to available details, UniCredit has sought to acquire Commerzbank since September 2024, though the German lender and officials in Berlin have so far rejected those advances. A successful tie-up would position UniCredit as a much larger player within Europe's biggest economy.
The Eurogroup President declined to single out individual firms for further discussion, but stressed that larger banks would improve the region's ability to invest in technology. "If you compare the technological investments of European banks to American banks or Chinese banks you will understand why we need bigger banks in Europe to facilitate and sustain more technological investment," he said.
Greece has signaled receptiveness to outside investment in its banking sector. Greek authorities backed UniCredit's stake in Alpha Bank and pointed to that transaction as an example of how European banking union might be advanced.
At the same Brussels meeting, European Central Bank banking supervisor Claudia Buch warned that integration within Europe's banking markets has moved slowly. She said: "practical progress on integration of European banking markets has been limited over the past decade." Buch added that "the cross-border provision of services remains relatively low, and cross-border merger activity has been weak."
The comments from Pierrakakis and Buch underline a recurring theme raised at EU financial gatherings: policymakers and supervisors continue to debate whether larger, more integrated banks are required to compete with major non-European institutions and to support sustained technological investment across the sector.
Key points:
- Eurogroup President Kyriakos Pierrakakis urged the creation of larger European banks and more cross-border M&As.
- UniCredit has pursued Commerzbank since September 2024; the German lender and Berlin have rejected the advances.
- ECB banking supervisor Claudia Buch said integration of European banking markets has been limited and cross-border merger activity weak.
Risks and uncertainties:
- Political and institutional resistance to cross-border deals - exemplified by Berlin's rejection of UniCredit's advances - could impede consolidation in the banking sector.
- Limited practical progress on market integration and low cross-border service provision may constrain the benefits of larger banks across Europe.
- Officials' reluctance to comment on specific companies leaves uncertainty over how policy endorsements would apply to ongoing or proposed transactions.