Talk about mergers and acquisitions in banking is gathering pace, with Commerzbank, BNP Paribas, Unicredit, Société Générale and Barclays all getting their mention in one way or other. Only UBS and Credit Suisse have thus far been exempt from speculation. How come?
The most recent example of increasing speculation about a consolidation in banking are negotiations between Italy’s Unicredit and French rival Société Générale as reported first by «Financial Times» (behind paywall).
Other potential deals involve a merger of Standard Chartered with Barclays as well as Deutsche Bank and Commerzbank. Commerzbank has been up for grabs for quite some time with France’s BNP Paribas mentioned as a potential buyer.
Size Matters
The urge of big banks to create pan-European champions in their industry is all the more apparent as investment banking has become more expensive due to increasing regulatory demands. Size therefore has become a major factor of survival.
A second important aspect are the rising costs in an industry at the same time as margins have been squeezed. Adding up the size of two major banks may bring important synergies, the big players seem to consider. And some say that this is how banking will fend off new competitors from the fledgling fintech industry.
Last but not least, there are the U.S. competitors to contend with. J.P. Morgan and Citigroup for instance have a better capital base than their European rivals and are thus better equipped to fight for market share. In global equity trading for instance, the four largest actors all are U.S.-based companies.
Swiss Banks Are Watching Events Unfold
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