- Analytics
- News and Tools
- Market News
- ECB lowers bar for bank mergers in hope of spurring consolidation
ECB lowers bar for bank mergers in hope of spurring consolidation
Reuters reports that the European Central Bank is lowering the bar for bank mergers in the euro zone, hoping to encourage an elusive wave of consolidation in a sector plagued by low profits and unresolved issues inherited from the last financial crisis.
In a guide published on Wednesday, the ECB clarified that merged entities won’t necessarily be asked for extra capital and will be allowed to use their own accounting models as well as any “badwill” - a paper profit that occurs when an asset is bought below its book value.
These were some of the concerns flagged by bankers in recent years when evaluating mergers and acquisitions (M&A) in the euro zone.
The ECB stressed, however, that it was not its job to orchestrate deals and these needed to be driven by the market.
“Our prudential mandate is not to assess whether consolidation efforts are beneficial,” ECB supervisor Édouard Fernandez-Bollo said in a blog post presenting the guide.
“But well-designed and well-executed consolidation can help address the overcapacity and low profitability problems that have been damaging the European banking sector since the last financial crisis,” he added.
The guide will now be open for consultation until Oct 1.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.
Bank transfers
