ECB Urges Banks to Merge Across Borders for Global Competitiveness

The European Central Bank (ECB) is urging banks to merge across borders and create 'European champions' that can compete globally, particularly against large US banking groups.

According to ECB Vice President Boris Vujcic, the banking sector in the euro area has become more concentrated over the last decade, but this process has been driven mainly by national mergers and acquisitions (M&A).

Vujcic emphasized that 'this is a missed opportunity,' as studies suggest that banks engaging in M&A activities improve their profitability and cost efficiency.

He argued that deeper cross-border banking integration would lower financing costs for businesses and families, while facilitating entities to diversify the sources of their profits and risks across different jurisdictions.