European Banks Must Scale Up to Compete with US Counterparts
European banks need to scale up and have access to deeper capital markets in order to compete with their US counterparts, according to senior European officials.
The call came during a meeting of EU finance ministers and central bank governors in Dublin to discuss the European Commission's report on strengthening the banking sector amid global economic competition.
European Central Bank Vice-President Boris Vujcic noted that while European banks are relatively strong in terms of liquidity, capital, profitability, and efficiency, they lag behind US banks in trading activities and post-trade services.
'If European banks want to compete directly with major US banks in these areas, they need to be able to operate on a much larger scale and have access to deeper capital markets,' Vujcic said.
The report calls for less political intervention in the banking merger process and removal of barriers to cross-border banking expansion across the region. An example of this is Germany's rejection of Italy's UniCredit bid to take over Commerzbank in June, highlighting the difficulties of carrying out cross-border banking transactions in Europe.