FRANKFURT (Reuters) – The European Central Bank (ECB) is advocating for increased cross-border bank consolidation to enhance lender valuations and sector efficiency, as stated by ECB Vice President Luis de Guindos in an interview with Portugal’s Expresso.
Italy’s second-largest bank, UniCredit, recently acquired a 9% stake in Commerzbank, Germany, surprising German authorities and encountering a hostile reaction from local management, who are keen to resist any takeover attempts.
The ECB will now decide whether to permit UniCredit to expand its stake. De Guindos’ remarks are likely viewed as supportive of UniCredit, yet the final decision will lie with the ECB’s supervisory arm.
“Cross-border consolidation is important and we hope that it continues to make progress in the near term,” de Guindos was quoted as saying by Expresso on Friday.
De Guindos highlighted that lower European bank valuations compared to those in the United States reflect inefficiencies within the euro area, such as differing national approaches and the incomplete integration of the banking system within the bloc.
“Because of this, investors regard U.S. banks as having higher intrinsic value than European banks,” de Guindos added.
Regarding monetary policy, de Guindos indicated that the ECB will have more substantial information by December to make a decision on a possible interest rate cut, but also mentioned the potential for an October decision.
“It’s true to say that in December, we will have more information than in October,” de Guindos stated. “We will have more information and a new round of projections. But, you know, we have left the door totally open. We want to maintain our optionality.”
Markets have fully anticipated a rate cut in December, but investors have not ruled out the possibility of an October move, especially in light of slowing economic growth.
