Regulation should not hinder cross-border bank deals: ECB's Villeroy

Governor of the Bank of France Francois Villeroy de Galhau attends a press conference after the Franco-German Financial Council meeting in Berlin, Germany, September 23, 2016. REUTERS/Axel Schmidt

PARIS (Reuters) - Tougher financial regulation should not have the adverse effect of hindering cross-border banking deals in Europe, said Bank of France governor and European Central Bank governing council member Francois Villeroy de Galhau.

Villeroy, who was commenting while addressing an industry event in Paris on Wednesday, did not mention any particular banks or deals by name, but said cross-border European banking tie-ups could bring benefits.

“Healthy and solid cross-border consolidation deals would allow banks to better diversify their risks across the whole of the euro zone, and to orient their funds more efficiently towards productive investments,” he said.

Recent takeover speculation has centered on Germany's Commerzbank CBKG.DE.

Germany has denied a report that it favored a merger of Commerzbank with France's BNP Paribas BNPP.PA, while Italy's UniCredit CRDI.MI recently told Berlin it was interested in eventually merging with Commerzbank, according to people close to the matter.

Villeroy also highlighted in his speech that euro zone banks were lagging their U.S. peers in the sense that the top five U.S. banks had a 40 percent share of their market, whereas the top five in Europe had a share of less than 20 percent.

Villeroy also welcomed this week’s decision by the European Banking Authority (EBA) to base its new post-Brexit headquarters in Paris, as it would help Paris in its bid to establish itself as Europe’s foremost financial hub.

Reporting by Yann Le Guernigou and Sudip Kar-Gupta