Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.

BREAKING NEWS

BREAKING NEWS

Bank mergers desirable, but up to them to decide on tie-ups - ECB's Villeroy

Bank mergers desirable, but up to them to decide on tie-ups - ECB's Villeroy
FILE PHOTO: Governor of the Bank of France Francois Villeroy de Galhau arrives at the Petruzzelli Theatre during a G7 for Financial ministers in the southern Italian city of Bari, Italy May 11, 2017. REUTERS/Alessandro Bianchi -
Copyright
Alessandro Bianchi(Reuters)
Text size Aa Aa

PARIS (Reuters) – ECB policymaker Francois Villeroy de Galhau said that while consolidation within the euro zone’s banking sector was desirable, it was up to individual banks to decide on which tie-ups to pursue.

Villeroy, who is also head of France’s central bank, has long called for cross-border consolidation, which he says would make the sector more efficient and resilient to shocks.

Some other ECB policymakers are also favourable to more consolidation in the euro zone’s highly fragmented banking market, which they say would make their monetary policy more potent through a better transmission to business and consumers.

While describing mergers as “desirable”, Villeroy refused on Tuesday to be drawn on concrete possibilities, when asked about the topic at a FT banking and finance conference in Paris.

“I don’t think of any special projects, this is not up to us, it is up to the banking industry to decide what could be the possible mergers,” said Villeroy.

The number of cross-border mergers has fallen in recent years with bankers saying that current regulations tie up too much capital in their European subsidiaries for cross-border mergers to make sense.

Villeroy said it was important to prevent ring-fencing on a national basis within cross-border banks, because that stops them from managing liquidity and capital at the group level, which could be dangerous in a crisis.

“A useful step could be to lower capital requirements of European subsidiaries, on the condition of safeguarding their financial position through credible cross-border guarantees,” he said.

(Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.