Deutsche Bank, Credit Suisse, UBS Give Impetus to Bank Deal Talk

James von Moltke Photographer: Alex Kraus/Bloomberg Photographer: Alex Kraus/Bloomberg Top executives from some of Europe’s biggest investment banks gave further impetus to talk of consolidation sweeping across the industry, saying it’s only a matter of time before more takeovers happen. Deutsche Bank AG Chief Financial Officer James von Moltke on […]

James von Moltke

Photographer: Alex Kraus/Bloomberg

Top executives from some of Europe’s biggest investment banks gave further impetus to talk of consolidation sweeping across the industry, saying it’s only a matter of time before more takeovers happen.

Deutsche Bank AG Chief Financial Officer James von Moltke on Tuesday signaled the German lender is interested in cross-border mergers when consolidation in European banking takes off. Sergio Ermotti, the chief executive officer of UBS Group AG, said the pandemic has made it clear that deals need to happen, comments that were echoed by his counterpart at Credit Suisse Group AG.

“We do expect consolidation to pick up” in European banking, von Moltke said at a virtual Bank of America Corp. conference.

Deutsche Bank Chief Executive Officer Christian Sewing has been saying for some time that he wants to be part of banking consolidation if and when it happens, but those statements have recently taken on added significance as the pandemic jumpstarted talks. In Spain, the boards of CaixaBank SA and Bankia SA recently approved a combination to create the biggest lender in the nation, and Italy’s Intesa Sanpaolo SA is taking over domestic rival Unione di Banche Italiane SpA.

At UBS, Chairman Axel Weber has drawn up his own wish list of possible partners, with Deutsche Bank among its most favored options, Bloomberg reported last week. Other banks on Weber’s list are BNP Paribas SA and local rival Credit Suisse.

Read more: UBS Chairman Revives Megamerger Vision With Wish List

“Over the last years, and last two years, the debate in Europe was focused on too-big-to-fail rather than too-small-to-survive,” UBS CEO Ermotti said at the conference on Tuesday. “Since Covid, things are crystal clear — consolidation is inevitable. It is good for the market.”

He also said that financial regulators “are open and willing to consider” deals by banks.

Speaking at the same event, Credit Suisse CEO Thomas Gottstein echoed the expectation that bank mergers will pick up, while cautioning that regulatory hurdles remain, including for domestic takeovers.

“Cross-border mergers or even in-market mergers are more complicated than they used to be if you think about general adversity against too-big-to-fail and all the regulatory approvals needed,” he said.

Analysts have highlighted the regulatory hurdles any merger between the two biggest Swiss banks would face.

What Bloomberg Intelligence says

“A potential deal between UBS and Credit Suisse would face material antitrust scrutiny in Switzerland, where approval may be elusive, in our view. The outcome may hinge on how regulators choose to define the affected markets. An easier regulatory path to a merger may await in the EU and the U.K.”

Aitor Ortiz, banking analyst

UBS and Deutsche Bank briefly explored the idea of a merger in 2019. The talks, which didn’t proceeded beyond the initial stage, grew out of stalled negotiations to combine the firms’ asset management businesses.

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