UBS’s Ermotti Says Bank Consolidation Could Happen End of 2020
UBS’s Ermotti Says Bank Consolidation Could Happen End of 2020
(Bloomberg) --
UBS Group AG Chief Executive Officer Sergio Ermotti said new European banking rules could be the trigger for long-awaited and much-needed regional banking consolidation as lenders weigh combinations to become more competitive.
“The second half of the year will be important because you have the finalization of Basel 3 and Basel 4 rules and how they will be implemented in the EU,” Ermotti said in an interview with Bloomberg TV during the World Economic Forum in Davos, Switzerland. European banks will realize the need to offset a shortage of capital in the period leading up to and after the new banking rules, he said.
The volume of bank acquisitions on the continent has slumped even as top executives acknowledge the need for fewer players across Europe’s fragmented banking landscape and governments seek healthier lenders to boost growth. Profitability is a fraction of that at Wall Street rivals, and even with stock markets near record highs, shares of many large lenders are languishing.
“Nobody can afford to say they are not a part of the consolidation process,” Ermotti said. UBS is actively considering where it could participate, he said, adding that the need for scale will help drive the process.
In 2019, Davos-goers saw bank mergers as a panacea for Europe. But a year later, nothing has happened -- except the implosion of Deutsche Bank AG’s attempt to take over Commerzbank AG, which foundered amid public opposition and the challenges of executing a deal. Consolidation “will happen, but it will take some time,” Tidjane Thiam, the chief executive officer of Credit Suisse Group AG, said this year. “We still have a job to do to convince the public that larger banks can be safe and not endanger the whole economy.”
--With assistance from Patrick Winters.
To contact the reporter on this story: Marion Halftermeyer in Zurich at mhalftermeye@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Ross Larsen
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