Banking consolidation pressures build in Italy
European financial groups are putting pressure on Italy to loosen up rules on bank mergers and acquisitions. According to a Financial Times article ("Groups call on Italy to ease rules on banks", 10/6/2004), the target is restrictive rules on foreign ownership of banks in Italy.
It's a test case in the power of the EU to open borders to cross-ownership and runs against Italy's determined protectionism and encouragement of small business. EU banking commissions are working to limit the amount to which any country can protect ownership of its businesses.
Among the large European banks who want to expand their Italian operations are Spain's top two banks, SCH (Santander Central Hispano) and BBVA (Banco Bilbao Vizcaya Argentaria), and the Netherlands ABN AMRO. According to the article, "ABN Amro sees Italy as a potential second European home market after the Netherlands." All three of these banks have minority stakes in Italian banks, but have been blocked by the Italian Government from gaining control of any banks. The head of the bank of Italy claims he wants to allow for more consolidation inside Italy (something that is happening slowly) before the borders are opened up for international mergers.
It's a matter of time. New EU accounting rules will force weaker Italian banks to recapitalize, and the source of money is likely to come from other EU countries. National banking control is one of the last gasps for economic sovereignty in the EU, and that is under enormous pressure.
This year's most spectacular cross-border move in Europe was SCH's move to buy Abbey National Bank in the UK. As US and Japanese banks get bigger, the pressure is on for European banks to expand, both worldwide and within the EU.
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