IMF supports bank mergers in Europe — World — The Guardian Nigeria News – Nigeria and World News

The International Monetary Fund (IMF) said Thursday it welcomes mergers between European banks to better finance innovative companies, although it declined to comment on talks of a tie-up between Commerzbank and Italy’s UniCredit.

“That has been our recommendation, that these mergers take place,” said Alfred Kammer, director of the European department at the International Monetary Fund.

At a press conference, he added that “larger pan-European banks” are needed and not just national players in the 27 countries of the European Union.

“One way to do this is through mergers and consolidations,” Kammer said, adding that the IMF would not comment on individual transactions.

UniCredit caught Germany by surprise by building a position in Commerzbank worth around 21 percent since the beginning of September, sparking speculation about a possible takeover.

In Germany, unions and politicians have expressed concern that the takeover of the country’s second-largest lender could bring job losses and reduce lending to its small and medium-sized businesses.

But for years, European policymakers have been pushing for deeper integration of euro zone financial markets, saying it is necessary to create financial institutions capable of competing globally.

UniCredit CEO Andrea Orcel has said openly that he sees “potential in a merger” with Commerzbank.

Such a merger would create Europe’s eighth-largest banking group in terms of balance sheet, behind Switzerland’s UBS and Germany’s leading Deutsche Bank, according to Bloomberg.

Last month, European Central Bank President Christine Lagarde said cross-border bank mergers in Europe were “desirable” to increase banks’ competitiveness.