Yves Mersch, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, about the ECB's efforts toward facilitating bank failures and bank M&A.
Consolidation seems to be something of a buzzword. It is associated with discussions of the profitability of banks, with debates on overbanking or the optimal size of a banking area, and with issues of competition.
From a prudential supervision perspective, Mr Mersch is concerned about efficient market functioning and sound banking structures. And as a central banker, his goal is to maintain a smooth transmission mechanism.
By reaping synergies, consolidation may help banks to address one of their most pressing challenges: how to reduce costs. That does not mean though that consolidation is the answer to everything. And it might not always be in the consumer interest.
Mr Mersch says: “As a supervisor, we take a neutral stance. We assess merger and acquisition proposals solely on technical grounds. It is for markets to decide whether or not consolidation takes place, and to what extent. Market forces should, however, not be undermined by unnecessary obstacles. While it is up to individual banks to futureproof themselves, policymakers and legislators can provide the right conditions. Seven years after the banking union was first proposed, it is about time for a single European banking market.”
Full speech on ECB
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