(Bloomberg) -- European Central Bank President Christine Lagarde said that a tie-up between Italy’s UniCredit SpA and Germany’s Commerzbank would be welcomed by those who’ve been calling for greater integration in the euro area’s financial sector.
“Cross-border mergers have been hoped for by many authorities,” Lagarde said on Thursday when asked during a press conference how the central bank, which also serves as the euro area’s top banking regulator, views the approach.
In order for UniCredit Chief Executive Officer Andrea Orcel to push his bank’s holding of Commerzbank shares much past the 9% holding he announced this week, the ECB would have to sign off on the move. UniCredit has said it’s applying for that authorization.
A deal would “satisfy many of those who have expected cross-border mergers to result” from efforts to integrate Europe’s financial markets such as the banking union, Lagarde said.
UniCredit yesterday disclosed its stake in Commerzbank which it partly acquired by buying shares from the German government. Orcel earlier on Thursday said on Bloomberg TV that a full takeover of the lender is an option.
Any acquisition of Commerzbank would create new EU banking giant and mark one of the region’s largest cross-border mergers in decades. While banking executives have long said the region needs bigger lenders, they have also said that diverging national rules stand in the way of deals.
The ECB’s supervisory arm has tried for years to reduce those regulatory barriers but hasn’t always been successful. More recently, rocketing profitability in the banking sector has started changing deal economics, with analysts saying that the UniCredit move on Commerzbank may usher in a period of dealmaking.
Earlier this month, the ECB approved a hostile takeover approach from Spanish lender Banco Bilbao Vizcaya Argentaria SA for a smaller domestic rival, Banco de Sabadell SA.
--With assistance from Daniel Hornak, Mark Schroers, Jana Randow and Zoe Schneeweiss.
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