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>> So here's an old idea that's gonna make a come back in 2018. European cross-border bank mergers are gonna be back on the agenda. I'm Peter Thai Larsen, a mere editor for Reuters Breakingviews, reporting from the heart of London's financial district in Canary Wharf. We're talking about cross-border bank mergers, which is something that really has been a taboo subject in Europe for well over a decade.
And there's a good reason for that. The last big cross-border deal in Europe, the takeover of ABN AMRO for over 70 billion euros back in 2007, was a disaster. Within a year of that deal being completed, ABN AMRO had been nationalized. And Royal Bank of Scotland of the UK is still to this day owned 70% by the governement.
But now that topic is back on the agenda. We're seeing speculation, for example, about Commerzbank of Germany being a target, not just for German banks, but, also, for other European banks like UniCredit and BNP Paribas. So what has changed? Well, the big difference is that Europe, in the meantime, has set up a banking union.
And that single regulator is very keen to have fewer banks in Europe. There are still about 5,000 banks in Europe. Many of them are small, many of them are inefficient. Big Chinese and US banks are much larger than European banks. So European banks can't compete as well internationally.
The interesting thing, though, this thing is really being driven by the regulators. So Danièle Nouy, who's the head supervisor of European banks, gave an extraordinary speech in September where she asked brave banks to set sail. And go and take advantage of this opportunity created by the banking union.
However, European bank CEOs, when you speak to them privately are much more reluctant to take part in all of this. They basically say that, actually, there aren't that many benefits from cross-border mergers. You don't get the same cost savings that you might get normally in a domestic deal.
You really have to conclude this is being pushed by the regulators. It's not being pushed by vain, glorious CEOs, or by greedy short-term shareholders. It's actually regulators and politicians who are getting their way.