Lagarde, EU competitiveness passes through “truly European and integrated” banks

Brussels – Completion of the banking union and completion of the capital market, of course, but above all, the strengthening of the banking sector and the collaboration between institutions and governments. From the ECB comes a new call to stop thinking nationally and think European in an increasingly globalized world. Christine Lagarde, president of the European Central Bank, does not mention specific cases. She does not mention Unicredit’s attempt to overtake the German Commerzbank. However, she hints that it could be one of the keys to European economic success.

“Truly European banks can effectively diversify their risks across sectors and regions,” Lagarde says on the 10th anniversary of the Single Supervisory Mechanism. European and strong banks “will have the capacity to lend more at scale and thus handle cross-border financing projects that smaller locally focused banks cannot.” She continues, “More integrated banks have the critical mass to attract companies throughout the euro area for stock market listings, debt placements, private equity transactions, mergers and acquisitions, and support for international growth.”

Large, solid groups can do Europe a lot of good, the ECB president is keen to point out. Looking at the policy agenda and the goals that the EU and eurozone states have set for themselves, “to emerge stronger, we need massive investment in both physical and human capital.” where “massive” means that “an additional 5.4 trillion euros will be needed between 2025 and 2031 to promote green transformation, accelerate the digitization of our economy and strengthen our military defence capabilities.”

Big banks can stimulate investment through lending. Still, private individuals risk being attracted elsewhere because, Lagarde continues, “currently only two banks incorporated in the euro area rank among the ten largest banks in the world.” Berlin and Rome are on notice. The Unicredit-Commerzbank union may be one of those deals that Europe and its future need.