Chesnot | Getty Images News | Getty Images
The Societe Generale chairman said the European banking space should follow in the footsteps of that of the United States, calling on regulators to facilitate greater consolidation in the region.
Speaking to CNBC over the weekend, Lorenzo Bini Smaghi said European banks need to focus more, so they can compete with US lenders.
“Generally if we look at Europe obviously there are too many banks and it’s too fragmented so I think Europe needs to move in the direction of more concentration to help improve the economy. If we compare it to the United States, we saw this process of concentration 30 years ago,” Smaghi told CNBC’s Charlotte Reed.
The French lender announced last week the acquisition of the equity and commodities markets branch of the German company Commerzbank. The deal, which has yet to be approved by regulators, is an attempt to have a bigger presence in the German market at a time when Deutsche Bank is redefining its strategy, following recent turmoil and management changes.
According to Smaghi, the transformation of European banks “must come”.
“And of course, as president of SocGen, I can say that we will be a protagonist in this process. But that requires things to happen on the regulatory side.
“I’m not suggesting anything at this point, just that we need more focused, bigger banks that can compete with American banks,” he said of potential new mergers.
Reports on Friday suggested that JP Morgan and the Industrial and Commercial Bank of China were looking to buy Deutsche Bank, which was quickly denied.
However, according to Elisabeth Rudman, managing director of DBRS, consolidation is not always the best strategy for these banks.
“We’ve seen big cross-border mergers and acquisitions in banking in the past and a lot of them haven’t gone very well at all… (It’s) hard to see this as a solution to everything,” a- she told CNBC. “Squawk Box Europe” on Monday.
“Europe is, in many ways, overbanked and there are still a lot of banks, some big banks and some small banks that are still in trouble. But there won’t be an overnight solution,” he said. added Rudman.
Correction: This story has been updated to correct a sentence that incorrectly stated that BNP Paribas bought DWS. DWS will instead transfer a fund administration unit to BNP Paribas Securities Services.