BRUSSELS, May 5 (Reuters) – The European Union needs its banks to be bigger if they are to compete with their counterparts in the United States and China, the chairman of the euro zone’s finance ministers’ group said on Tuesday.
“We need European champions. We don’t need national champions. All of us have a tendency to be more protective about our national market, of course,” Kyriakos Pierrakakis told the European Parliament’s economic committee.
Cross-border bank mergers that would create large financial institutions in the 27-nation EU are often hampered by national politics, like Berlin’s opposition to the bid by Italy’s UniCredit to take over Commerzbank .
“Unless we realise that we need to capacity-build European banks at the European level, they will not be able to compete with their American and Chinese counterparts,” Pierrakakis said.
Europe’s largest bank by market capitalisation, Banco Santander, is five times smaller than the biggest bank in the United States, JPMorgan Chase .
One of the key reasons why the EU needs bigger banks is the amount of money they need to invest in technological development to stay competitive at a time of very fast growth of new digital financial instruments and markets, Pierrakakis said.
“Let’s try to think five years ahead or 10 years ahead. If they miss out on the technological investments that I just mentioned, they won’t be part of the equation,” he said.
Pierrakakis also made a case to create a more unified EU single market for financial services, with a single supervisor for market players that has been proposed by the European Commission but is opposed by Luxembourg and Ireland.
“We need centralized supervision in our capital markets… because …we shouldn’t be doing the same thing 27 times, and if you do the same thing 27 times, we are effectively not a complete capital market,” he said.
(Reporting by Jan Strupczewski; Editing by Sanjeev Miglani)
Comments