EU Finance Ministers, including Spain's Nadia Calviño, at the informal Ecofin in Berlin MAJA HITIJ / POOL / EFE
The chips are moving again on the European banking board.
The merger of CaixaBank and Bankia is emerging as a first step in the wave of bank mergers that Brussels and Frankfurt are so eager to do.
And, at the same time, it is another missed opportunity for the formation of transnational financial groups that allow diversifying risks and avoiding competition problems.
The President of the ECB, Christine Lagarde, urged the partners of the single currency during the informal meeting of the Eurogroup in Berlin to accelerate the work to build the Banking Union and promote "transnational integration" in the euro zone.
The message from the European Central Bank (ECB) is clear and insistent.
As early as January, Andrea Enria, the body responsible for banking supervision, anticipated that the leaders of European banks were considering "consolidation strategies."
And he sent a message to the sector: "There is no impediment that we want to put in that way from the supervisor's side."
Unlike.
The institution sees mergers as a way to end the excess of entities in Europe, increase bank profitability and diversify risks.
The ECB's encouragement to such operations intensified in the wake of the pandemic.
The institution decided to pave the way for them in the summer by eliminating obstacles, for example, in capital requirements.
The supervisor released a guide on mergers to set an approach, which it submitted to a public consultation that will end on October 1.
The sector considers that with this movement the ECB wanted to convey unequivocally that, far from penalizing them, the institution encouraged concentrations.
Consulted sources point out that the opinion spread in the ECB that the EU wasted the financial crisis of 2008 to achieve a greater integration of its entities and a certain unease after seeing how large operations such as Commerzbank and Deutsche Bank were frustrated.
Commerzbank, in fact, was under the scrutiny of the Dutch ING and the Italian Unicredit.
But regulatory hurdles prevented those options from thriving either.
"The competent national authorities, without a Banking Union, will greatly protect the capital and liquidity in that country," said the CEO of ING, Ralph Hamers.
In fact, last year saw the lowest level of transactions within the European Economic Area since 2009. According to S&P, there were only 40. And of the 16 largest transactions, ten were between entities in the same country.
The ECB awaits a new wave of mergers that will reduce excess capacity in the euro zone and improve the performance of European banks.
This, according to
The Banker
, is the least profitable in the world, with a return of 6.71%.
The economic leaders of the European Commission asked Vice President Nadia Calviño, who was in Brussels on Monday, about the merger between CaixaBank and Bankia.
Calviño said that the community institutions see this operation as the first step in "a consolidation process" at the European level that they have been asking for for some time.
The ECB did not want to comment on the operation last Thursday.
His vice president, Luis de Guindos, insisted, however, that the pandemic has accentuated the "main vulnerabilities" of European banks: their low profitability and valuation.
"Consolidation is one of the instruments," he said.
At his side, Lagarde insisted that he would like to see a “fully developed Banking Union”, with cross-border and resolution mechanisms.
Eurobonds
The finance ministers of the euro zone addressed on Friday and yesterday the urgency of giving new impetus to the Banking Union.
French Bruno Le Maire asked to give the project a boost.
"There will be no European sovereignty without a powerful financial system," he said.
The president of the Eurogroup, Pascal Donohoe, recalled that this is a "priority issue".
Financial sources maintain that the ball is still in the capitals' court.
The rescue fund (Mede) prepared a proposal for a roadmap to create a cross-border European financial market between 2020 and 2027 with three keys: the creation of a community deposit guarantee fund, the limitation of sovereign debt in the balance sheets of banking and the removal of barriers to liquidity and the movement of capital between countries within banking groups.
The objective, according to that document, was a "necessary" consolidation of the financial system.
The Director General of the Association for Financial Markets in Europe (AFME), Jacqueline Mills, considers that “one of the main obstacles to cross-border consolidation in the EU continues to be the lack of cross-border liquidity exemptions”, as well as the “absence exemptions of this type ”for capital and regulatory requirements.
"These obstacles restrict the efficient flow of capital and liquidity within cross-border institutions," he adds.
Germany tried last December to unravel the Banking Union through a proposal that finally envisaged the creation of a community fund to ensure the deposits of European taxpayers.
In return, Berlin asked to limit bank exposure to the sovereign debt of each country, which was viewed with much suspicion by Italy and Spain.
These countries said they would go to that extreme only if there were Eurobonds.
In the end, the extensive list of red lines made the project wreck.
The Peterson Institute for International Economics and Bruegel researcher, Nicolas Véron, points out a new element that could give the Banking Union a new opportunity.
The launch of the recovery fund - the EU Next Generation package - will involve the issuance of 750,000 million euros.
"This is going to have an impact on the composition of banks' balance sheets and represents a change in the conversation," he says.
In other words, it introduces the Eurobonds that Madrid and Rome claimed to move forward.
Another thing is how far this new element manages to propel the debate now.
An action plan for a "fairer" taxation
In yesterday's informal Council of Economy Ministers (Ecofin), EU Finance officials discussed the taxes that must be implemented at the community level in order to repay the debt that will be necessary to finance the recovery plans.
The Commissioner for the Economy, Paolo Gentiloni, advocated advancing a minimum taxation for companies and a tax on large digital corporations, which he considered to have been the “real winners” of the past crisis. “It is time to progress towards a fairer and more effective taxation in the EU ”, Gentiloni said, adding:“ It is now or never ”.
The commissioner said that the EU had behind the support of public opinion and the European Parliament to move towards more equitable corporate taxation.
"The European Commission will present an action plan in the autumn," he announced. For now, the EU will have to decide the steps it will take if the OECD fails in its attempt to agree on the so-called GAFA rate, after the initials of the companies Google, Amazon , Facebook and Apple.
The Commission is determined to move forward.
“It is not clear that there is an agreement in the OECD.
We will have to see what is the appropriate response at the community level, "said the Spanish Vice President Nadia Calviño, who recalled that this tribute is also being worked on at the national level. The German Minister, Olaf Scholz, affirmed that the taxation of digital companies is "Urgent", while Frenchman Bruno Le Maire added that if an agreement in the OECD is "impossible", Paris will advocate next year to reach a "European solution".