Mon, Jan 27, 2025 page5

• Suitors at Davos given a cold shoulder

  PUSHBACK: Despite increasing calls from regulators, dealmakers and governments that more radical combinations are needed, European banks are still resisting consolidation

  • Bloomberg
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  Heading into the World Economic Forum, the thinking was it would be the perfect place for many of the biggest deals in the works among Europe’s lenders to inch their way into existence.

  There was Banco Bilbao Vizcaya Argentaria SA’s (BBVA) takeover offer for its smaller rival, Banco de Sabadell SA, for instance. Or UniCredit SpA’s bid for its domestic competitor Banco BPM SpA and its growing interest in Germany’s Commerzbank AG.

  For months, those deals have faced resistance from either the target or other stakeholders, including governments. The hope was they might finally come around at Davos, known for its ability to get CEOs in a room together to hash out their differences.

  

  Attendees walk between venues at the World Economic Forum in Davos, Switzerland, on Thursday last week

  .Photo: Stefan Wermuth, Bloomberg

  That was not quite what happened.

  Instead, Commerzbank CEO Bettina Orlopp ratcheted up her rhetoric against UniCredit — labeling the lender’s recent overtures “hostile” in a clear escalation of her defense against the unwanted deal. The German government, which holds a 12 percent stake in the bank, said something similar. Meanwhile, Sabadell said it was considering moving its legal domicile back to Catalonia, as it seeks to muster political support to help it fight against BBVA’s bid.

  On Friday came the shock announcement that Banca Monte dei Paschi di Siena SpA would seek to acquire its bigger rival, Mediobanca SpA, adding to the flurry of complicated takeover talks. Mediobanca said it considers the approach as hostile and would likely end up rejecting it.

  It all underscored the fact that even after years of waiting, European banks and their governments are still resisting the urge to consolidate faster.

  That is despite increasing calls from regulators, dealmakers and governments that more radical combinations are needed so Europe’s lenders can become the behemoths they need to be to finance the growth the continent needs.

  “Europe needs to decide: Does it want banks which are a utility or a force of capitalism?” Lombard Odier senior managing partner Hubert Keller said.

  Just hours before the Orlopp’s announcement on Wednesday, she was spotted wandering through the icy streets of Europe’s highest city and having lunch at a small eatery with her communications chief.

  UniCredit CEO Andrea Orcel said that there had been various meetings with the German government and Commerzbank executives before his bank took control of about 28 percent of Commerzbank.

  “Commerzbank was the first call we had in the morning to debrief” after the Italian lender acquired a large stake last year, he said in an interview with Bloomberg TV anchor Francine Lacqua. “From there, it moved to surprise. Well, imagine ours. And then it moved to hostility or to opaqueness.”

  BBVA chairman Carlos Torres was seen running up Davos’ main drag.

  Hundreds of miles away, Sabadell said its board would begin meeting to discuss the possible headquarters move, as it seeks to muster political support to help it fight against the hostile bid.

  Over at the confab’s annual meeting, Banco Santander SA chair Ana Botin faced a series of questions about whether she would ever consider selling her business in the UK, where headaches have begun to pile up, as the bank braces for a potentially costly review into its motor finance business.

  “We love the UK,” Botin said. “It’s a core market and will remain a core market for Santander. That’s it.”

  Lenders’ resistance to do deals has come even as a growing chorus of regulators are supportive of cross-border banking mergers across Europe. European Central Bank President Christine Lagarde has said such deals would be good for the region if it allows lenders to better compete against their rivals in the US and China.

  “The good thing is that we identified the issue which is the competitiveness of Europe,” Intesa Sanpaolo SpA chief financial officer Luca Bocca said, adding that cross-border deals will be difficult to execute. “There needs to be flexibility that accounts for regional structural differences.”
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