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

European banking leaders are hoping for further deal-making activity on the continent as mergers and acquisitions in the U.S. are expected to pick up under the new Trump administration.

Steven van Rijswijk, chief executive of ING, the largest bank in the Netherlands, said there are too many banks in Europe, adding to the inefficiencies of the European Union’s financial system.

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

His comments come amid speculation over whether UniCredit, the sixth-largest bank in Europe by market cap, will be permitted to merge with Commerzbank, Germany’s second-largest bank.

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

Over-regulation

CEOs have hit out regulators in the European Union over what they perceive to be over-regulation at a time of heightened global competition. Many fear the United States will pave the way for its companies globally by lowering barriers, while the European Union instills even more rules.

The ING bank CEO also suggested that fragmented laws across Europe were hampering a more efficient banking system, in stark contrast to the United States.

“We see also in Europe that there are different regulations on different elements,” van Rijswijk said. “Talking about anti-money laundering, GDPR or cyber there are differences in Europe that hamper [the] efficient way of banks doing business with our customers.”

“Consolidation, also because of the compartmentalization of regulation, I believe will largely happen within individual markets,” he added.

However, Sergio Ermotti, chief executive of Swiss bank UBS, which operates a large wealth management division in the United States, suggested that while U.S. authorities are unlikely to water down rules for large banks, the policy stance taken by regulators under the new Trump administration is likely to see deal making revive among several small and regional banks.