Just as Italy’s UniCredit was considering a possible takeover of Germany’s Commerzbank, European Central Bank President Christine Lagarde stated on Monday that Europe needs bigger and stronger banks that can compete with their US and Chinese rivals.
After acquiring a Commerzbank stake earlier this month, UniCredit, the second-largest bank in Italy, is pushing for a merger between the lenders, which has angered both the bank and the German political establishment, which supports the lender’s independence.
She went on to say that her remarks shouldn’t be interpreted as a direct interference in any specific transaction.
Sources had claimed that ECB policymakers are in support of the pact in principle and considered Berlin’s objection as running against the notion of European integration. Speaking before the Committee on Economic and Monetary Affairs of the European Parliament, Christine Lagarde acknowledged that mergers carry some risks but said the private sector should determine whether a deal makes sense.
It’s not without risk and liability, of course, but it’s up to the private sector initiative leaders to weigh all of that and decide if the move makes sense or not,” the speaker stated. In the end, the rate-setting Governing Council must approve any merger, and the ECB’s supervision branch must approve UniCredit’s intentions to increase its Commerzbank holding.
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