SSM and bank mergers: Don’t put the cart before the horse
As political headaches dog efforts to bolster banking integration, fostering European champions through mergers is the least of the single supervisor’s worries.
In an interview with Euromoney, Single Supervisory Mechanism (SSM) board member Ignazio Angeloni is keen to see cross-border bank mergers in the eurozone, at least in the abstract. It would be a means for regional champions to grow and to take on the US investment banks more effectively, he says.
This comes at a time when a consensus on European deposit insurance scheme looks more elusive than ever. The debate in some policy circles has turned to whether the supervisor should allow banks to just get on and do it, regardless of the deposit insurance delay, and instead push harder for waivers of national liquidity and capital requirements for cross-border banks. Such mergers might themselves do away with the need for common deposit insurance as risk would be spread within the banks, goes the thinking.
Angeloni is sceptical of that idea, as he says national supervisors will continue to justify barriers to intra-group capital and liquidity flows, precisely because of the lack of a common deposit insurance scheme.
In any case, the practical difficulties of intra-eurozone mergers go much deeper, thanks to national variations in everything from insolvency frameworks to governance standards.