FRANKFURT (Reuters) - Europe’s top bankers said the cost of new bank safety rules will force consolidation in the sector but poured cold water on the prospect of weaker lenders like Commerzbank (CBKG.DE) being snapped up, citing a regulatory to push shrink balance sheets.
Bank watchdogs seeking to improve the safety of global lenders have pushed for lenders to hold more capital, placing an additional burden on profits already strained by the low interest rate environment.
This, combined with a gradual withdrawal of some of the stimulus measures which have propped up struggling lenders will change the banking landscape, Deutsche Bank co-chief executive Anshu Jain told an industry conference in Frankfurt.
“There is a clear consolidation of the industry and there is a simplification of the business model,” Jain said.
“There is a tremendous opportunity to take market share organically but, frankly, inorganically as well,” Jain said, a reference to the possibility of acquisitions.
Asked what role Deutsche Bank could play in consolidation, Jain said Germany’s largest bank was primarily focused on fulfilling bank safety rules to build up capital.
UniCredit boss Federico Ghizzoni said only banks with a certain size could afford to make investments, such as the 700 million euros ($921 million) to 800 million euros his institution had spent on information technology to meet regulatory standards.
Bankers stopped short of saying the need for scale would translate in to a raft of takeover deals, citing a drive by regulators to bring down leverage, a move which penalizes banks with large balance sheets.
UBS AG UBSN.VX chairman Axel Weber said the Swiss bank was currently focused on meeting new bank safety rules, playing down speculation that the lender is about to buy a stake in Germany’s Commerzbank (CBKG.DE).
“I know what you are alluding to, I can assure you that we are focused on implementing our strategy and raising our capital level,” Weber said at the conference in response to a question about whether UBS was interested in buying Commerzbank.
Weber said that while acquisitions could not be completely ruled out, “this is not an issue in the short term, or something which is planned in a manner which would impact our process of building up capital”.
In July, German media reported that Finance Minister Wolfgang Schaeuble had spoken to Weber about the possibility of the Swiss bank buying the government’s remaining stake in Commerzbank.
The reports said the German government, which bailed out Commerzbank in the financial crisis, might be willing to sell its 17 percent stake to a European peer. By engineering a sale to preferred bidder, the government hoped to retain some control over the bank’s fate, the reports said.
Ghizzoni said UniCredit was not interested in buying Commerzbank.
Axel Weber said that for any deal to work, it would take more than just the consent of the German government, and would require the consent Commerzbank Chief Executive Martin Blessing.
“It takes two to have a successful marriage, and I think Mr. Blessing, as a potential partner, would also have a say in all this. Should it ever go in that direction,” Weber added, without elaborating further.
Additional reporting by Jonathan Gould; Editing by Greg Mahlich, David Holmes and David Evans