Olivetti's bid for Telecom Italia will prove a watershed in European corporate finance whether it succeeds or not. First, it shows that the orgy of shareholder value-linked corporate restructuring promised by proponents of the euro will happen, and faster than anyone predicted. Second, it is proof that, however much Europeans may try to prevent it, what happens in the US eventually happens in Europe. This is an unprecedented hostile leveraged bid. At a stroke every European corporation has been forced to acknowledge that it is in play. And at a stroke it has created a US-style environment for investment banks, their corporate advisory teams and the leveraged lenders. Right now all over the eurozone corporations are hiring investment banks to explore defences and acquisitions of their own.
Unexpectedly, one sector in Europe that seems to have made the greatest strides in introducing the notion of shareholder value is banking itself. Fortunately for banks, measuring their performance has long proved extremely difficult. While concepts such as Economic Value Added (EVA) - introduced by consultants Stern Stewart and now widely accepted - have been successfully applied to industry, the complexity of banks' operations and the opacity of their reports and accounts have made it difficult to apply to them.