Europe bank bosses yearn for M&A as U.S. dealmaking expected to take off

European banking executives are hoping for more deal-making activity on the continent, as mergers and acquisitions in the United States are expected to accelerate under the new Trump administration.

Steven van Rijswijk, Managing Director of INGthe largest bank in the Netherlands, said there were too many banks in Europe, increasing the inefficiency of the European Union’s financial system.

“I think there are too many banks in Europe to have an efficient capital system,” he told CNBC at the World Economic Forum in Davos, Switzerland.

His comments come amid speculation over whether UniCreditthe sixth European bank in terms of market capitalization, will be authorized to merge with Commerzbankthe second largest German bank.

The Italian lender holds a stake in the German bank through a nominee and is currently awaiting approval from the European Central Bank to increase its stake. If allowed, it would be one of the largest cross-border transactions in European banking in years, but it has run into difficulties. political headwinds.

CEOs take on regulators in the European Union because of what they perceive as excessive regulation at a time of increased global competition. Many fear that the United States will lead the way for its businesses globally by lowering barriers, while the European Union imposes even more rules.

The CEO of ING bank also suggested that the fragmentation of laws in Europe hindered a more efficient banking system, unlike in the United States.

“We also see in Europe that there are different regulations on different elements,” van Rijswijk said. “When it comes to anti-money laundering, GDPR or cybersecurity, there are differences in Europe that hinder [the] efficient way for banks to do business with our customers.

“Consolidation, particularly due to regulatory silos, will happen, I think, largely within individual markets,” he added.

However, Sergio Ermotti, managing director of a Swiss bank UBSwhich runs a major wealth management division in the United States, suggested that while US authorities are unlikely to water down the rules for big banks, the policy adopted by regulators under the new Trump administration is likely to see the conclusion of agreements resume between several small and large banks. regional banks.

“What will probably be allowed is probably first and foremost consolidation in the United States, among the second-tier banks. Streamlining that aspect a little bit. And that, in turn, will create opportunities,” Ermotti told CNBC in Davos.

“I don’t think we’re going to see a lot of deregulation,” added Ermotti, who runs UBS through his forced takeover of competitor Credit Suisse. But he added that he instead expects a “streamlining” of existing regulations.

José Viñals, president of Chartered standardsaid he hoped for “thoughtful” deregulation in Europe rather than A watering down the rules for the sake of it.

“I think thoughtful deregulation could also be beneficial, for example, to other parts of the world. I’m thinking of the European Union,” Vinals told CNBC. Stan Chart is a London-listed bank but derives most of its profits from Asia.

“This is something that will be positive for growth. But we know that these policies are difficult to implement, but they are not impossible,” he added.

Likewise, Adena Friedman, executive director of Nasdaqsaid Europe is unlikely to see the benefits of a Capital Markets Union – a unified regulatory framework for capital, like that of the United States – unless smaller regulators concede powers to a pan-European regulatory agency.

“There are layers and layers of regulation” in Europe, Friedman told the CNBC audience in Davos.

Europe must decide “which elements of society and the community should be regulated by a national regulator, and which elements should be regulated by a regional regulator”, declared the head of Nasdaq. In addition to New York, the company operates exchanges in Sweden, Denmark, Finland and Iceland.

“There are national regulations and regional regulations. This must change,” she said. “It’s very solvable, it’s just a matter of will.”