Bank mergers are key to strengthening the euro zone: the French finance minister

BUCHAREST (Reuters) – Mergers in Europe's fragmented banking sector are needed to boost resilience as the eurozone seeks to protect itself from future crises, the French finance minister told Reuters in an interview.

Bruno Le Maire, who joined the centrist government of President Emmanuel Macron in 2017 when he belonged to the French Conservative Republican Party, said that the consolidation of the banking sector was necessary in parallel with the establishment of a single supervisor and more integrated capital markets.

"I consider that today, European banks are still too fragmented and that we need bank consolidation," said The Mayor in Bucharest, where he attended a meeting of finance ministers of the country. 39; EU.

Speaking with Reuters on the occasion of a dinner in an upscale restaurant in the Romanian capital, The Mayor declined to comment on specific offers. The largest ongoing transaction is a possible merger between German lenders Deutsche Bank and Commerzbank.

Despite persistent speculation, sometimes involving French banks, there has been little cross-border mergers of banks in recent years in Europe, although the European Central Bank has repeatedly called for consolidation which, in its view, would ensure that credits reach where they are most needed.

The Mayor, who has attended some of the most prestigious French schools and has held numerous positions of responsibility in the government, said that the euro area should finalize in the coming months the implementation of support plans for banks cashed with bad debts and better integration of capital markets, including by agreeing to harmonize insolvency laws – a sensitive issue for some countries.

"If eurozone member states are not able to take some steps forward in the coming months, we risk weakening the euro and seeing new fractures emerge in the eurozone" said the Mayor.

Policy makers such as IMF head Christine Lagarde have warned that the Eurozone's financial sector will remain dangerously vulnerable to shocks if it does not complete risk-reduction reforms quickly.

The Mayor also wants the eurozone to draft a shared budget plan quickly to encourage the convergence of the euro area economies. In particular, the details of its governance and its link to the wider EU budget remain to be clarified.

ECONOMIC DIVERGENCE

"The euro area will not survive the growing economic divergences between the Member States. We must equip ourselves with instruments to reduce differences, "he said.

France, with Germany, defended the idea of ​​a budget for the euro area, but had to reduce its ambitions in the face of Dutch resistance.

The Netherlands rejected the idea that the budget could help Member States facing economic shocks, fearing that this could result in transfers from the richest countries to the poorest.

While the elections to the European Parliament are to be held in May, the decidedly pro-European minister has weighed in on the debate on the future of the Union this week with a book warning that Europe must guarantee that it does not lag behind China and the United States in technological progress or risk. to be dominated by them.

The Mayor, who, along with the German Minister for the Economy, published in February an industrial policy manifesto calling for more investment in technological research, revision of antitrust rules and aid for the economy. State and strengthen the defenses against foreign acquisitions, said that EU rules on state aid should be more flexible.

He added that the approval of project aids needed to be much faster, otherwise companies would look beyond Europe to meet their needs. "Speed ​​is essential … Some companies need technology and will find it where it will find it."

The minister also called for an overhaul of the antitrust rules after the European Commission blocked the plan to merge the railway activities of Siemens and Alstom, saying that these links were necessary to constitute European champions.

"What do we want tomorrow for our telecommunications, our trains, our banks or our cars? I want that in all these areas, we keep our (industrial) European capabilities, which must be done through consolidation. "