This has resulted, to a large extent, from the overall rise in terms of value in cross-border mergers and acquisitions in the euro area banking sector since 2004. In 2005, the value of cross-border bank M&A deals was particularly high, mainly owing to the acquisition of the Bayerische Hypo- und Vereinsbank by UniCredito Italiano.
Generally, cross-border M&A activity is one way to increase competition in the banking sector, which tends to contribute positively to economic growth. While cross-border M&A activity tends to increase competition, extensive public ownership of banks constitutes a possible distortion of competition in the banking sector, which also works against the development of capital markets. 11  The indicators report the variance ratios, i.e.