ECON report on cross-border Mergers and Acquisition

21 March 2006

ECON Rapporteur Joseph Muscat presented his own initiative report on cross-border Mergers and Acquisition examining possible obstacles to mergers and acquisitions in the financial services industry. Taking note of the introduction of the concept of a consolidating supervisor, the report states that this should be complemented with a balanced and clear division of home/host supervisory responsibilities, in particular when a subsidiary in a host country encounters problems or is hit by a financial crisis.

At the heart of the problem is the absence of a legally-binding agreement in the case of a crisis caused by market failure. “In highly integrated financial markets, a crisis which could easily spread over national jurisdictions, turn into a pan-European financial crisis and ultimately hit the stability of the Euro and European economies” the report says. “(This) can not be efficiently tackled by national supervisory authorities acting on a solo basis anymore”.

The rapporteur therefore calls to “launch in-depth discussions on the appropriate structure of supervision of EU financial markets, clarification of powers and responsibilities between home and host supervisors and adequate crisis management procedures.”

Draft report

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