German opposition to a takeover of Commerzbank by UniCredit is a symptom of a wider issue
Demonstrators hold up a placard reading"Future means to me: Stop the merger-horror" during a union protest in front of the headquarters of German bank Commerzbank in Frankfurt last week These are worrying times for the EU economy. Some of the biggest powerbrokers in the region are stymieing reforms aimed at boosting growth. The latest example is the
Last week, UniCredit increased its shareholding in Commerzbank to 21 per cent and it has not ruled out making a full takeover bid. Olaf Scholz, the German chancellor, described the move asThe opposition CDU Party, which is likely to form the next government, was even more hardline in its response and vowed to block any potential takeover. The German position appears to be motivated primarily by economic nationalism and self-interest.
The EU banking sector was comprehensively reformed in the wake of the 2008 financial crisis. The most important of these reforms was the creation in 2014 of the Single Supervisory Mechanism, based in Frankfurt.The SSM aims to create a more stable pan-EU banking sector.Marking a global milestone: The UK exits coal powerBut stability comes with a cost and nowhere is this more evident than in Ireland.
Much greater levels of cross-border consolidation and trade in financial services had been anticipated. The hope was that the emergence of large- scale EU banks would help deploy capital where it was needed and stoke economic growth. A decade on, the level of consolidation across the EU has been minimal. If UniCredit is eventually successful in taking over Commerzbank, it could spark a wave of cross-border consolidation across the EU. But the German government looks as if it will prioritise domestic political considerations over the best outcome for the EU.
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