FRANKFURT, Sept 20 (Askume) – The European Central Bank wants more cross-border bank consolidation to improve bank valuations and industry efficiency, ECB Vice President Luis de Guindos said in an interview with The Portugal Express.
UniCredit, Italy’s second-largest bank, last week invested in Commerzbank AG CBKG.DEbought a 9% stake , which alerted the German authorities and faced hostility from the local management who wanted to prevent any takeover attempt.
It will now be up to the European Central Bank to decide whether to allow UniCredit (CRDI.MI) to increase its stake. De Guindos’ comments could be seen as a boost for UniCredit, although the decision will depend on the ECB’s supervisory arm.
“Cross-border integration is very important and we hope it will continue to progress in the short term,” the Express quoted de Guindos as saying on Friday.
He said the lower valuation of European banks compared with the United States reflects inefficiencies in the euro area, such as measures taken by countries and the lack of full integration of the euro area banking system.
“Because of this, investors believe that the intrinsic value of U.S. banks is higher than that of European banks,” de Guindos said.
On monetary policy, de Guindos said the ECB would have better information in December for a possible rate cut, but he kept his mind open on possible actions in October.
“It’s true that in December we’ll have more information than we did in October,” DeGuindos said. “We’ll have a lot more information and a new round of forecasts. But, you know, we have to keep our options open.”
The market is fully aware of the impact of the rate cut in December, but given the faltering economic growth, investors are seeing the possibility of a rate cut in October as well.
