European banking consolidation still 5 years away

Europe will have to wait at least five years before banks begin to consolidate across borders, as they wrestle with low interest rates, regulatory reforms and the need to overhaul technology, bank executives said yesterday.

Lenders are facing growing pressures from politicians and consumers to refocus their business models and cut costs, pushing consolidation down the list of management priorities, Frederic Oudea, the chief executive of Société Générale, told a conference yesterday.

“Consolidation is not at all on top of the agendas of bank CEOs.

"We are a sector that is facing a huge transformation [and] my first focus is on what I can achieve organically.”

Cross-border banking acquisitions in the eurozone peaked in 2007, when a consortium led by Royal Bank of Scotland bought ABN Amro in a deal that turned disastrous for all parties.

Some bankers had predicted that the launch of a common supervisor for large European banks, in 2014, would create transparency and uniform capital structures, paving the way for cross-border combinations.

While markets may put some banks under pressure to expand through acquisitions, banks themselves are not yet ready, said Federico Ghizzoni, CEO of Italy’s UniCredit.