Daily Management Review

Traditional Banking Mergers Are Currently Unlikely, , According To The BBVA Chairman


Traditional Banking Mergers Are Currently Unlikely, , According To The BBVA Chairman
The lack of advancement in the banking union makes a conventional banking merger in Europe unlikely at the moment, according to Carlos Torres, chairman of BBVA.
"It is difficult to see cross-border mergers because of the lack of functioning of the banking union, which is half done," Torres told a financial event on Tuesday.
The lack of progress in the banking union, which was necessary for more effective resource allocation and investment, was described as "very frustrating" by the speaker.
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The chairman of BBVA stated that in this situation, deploying digital banking models like the one the Spanish lender is implementing in Italy makes it simpler to pursue growth strategies.
In order to ensure that taxpayers would no longer be responsible for rescuing failing lenders, as they were during the global financial crisis, plans for a banking union were introduced in 2012. This single system of regulation would apply to the top lenders in the euro zone.
Regarding traditional consolidation, Torres said it was a an issue that "we do not spend much time on, except when there is obviously an opportunity (...) but that happens very sporadically."
Torres' remarks followed BBVA Chief Executive Officer Onur Genc's statement last week that additional financial sector consolidation was critical in a sector where scale was "critical."
BBVA terminated merger negotiations with smaller Spanish rival Sabadell (SABE.MC) in 2020, despite the fact that the market had always considered the deal a possibility given BBVA's strong solvency buffers.