Yet, at the same time, supervisors are acknowledging that mergers between domestic banks offer few synergies. And cross-border operations are full of regulatory obstacles, so what’s the solution? To the extent that it helps to reduce excess capacity, consolidation is positive from the point of view of cost structure. We also need to maintain a competitive environment.
In other words, we need to avoid a situation in which there are very few banks. In this context, fintech and bigtech companies are also potential competition. Domestic consolidation might be a solution for small and medium-sized banks, but the larger banks could perhaps look to cross-border consolidation. In any case, it’s not the ECB’s place to say which banks should or shouldn’t merge.