France's Biggest Lender Warns of 'Too Many' European Banks Amid UniCredit's Commerzbank Bid

France's largest lender, BNP Paribas, has expressed concern over the increasing number of European banks, raising questions about the region's banking landscape as UniCredit pursues a takeover of Germany's Commerzbank. In a recent statement, BNP Paribas CEO Jean-Laurent Bonnafé warned that there are "too many" banks in Europe, suggesting that consolidation is necessary to ensure the sector's long-term competitiveness.


UniCredit's aggressive pursuit of Commerzbank has sparked a debate about the future of European banking. The Italian bank's rapid increase in its stake in Commerzbank, from 9% to 21% in just a few weeks, has been described as hostile by German authorities and politicians. UniCredit CEO Andrea Orcel has stated that the investment offers several pathways, including a full merger or strategic collaboration, to unlock Commerzbank's unexpressed value.


BNP Paribas' warning comes as European policymakers have been working for more than a decade to establish a "true banking union" to make lenders across the region stronger and better supervised. The unfinished project means that the intervention framework for banking crises continues to be an awkward mix of national and EU authorities and instruments. The European Commission has adopted a broader, more optimistic view of potential mergers, highlighting that they could make banks more resilient and enable them to pursue more efficient business models.


The potential merger between UniCredit and Commerzbank could generate significant synergies, with a recent Goldman Sachs analysis suggesting a 15% reduction in Commerzbank's operational costs, translating to around €800m in savings. This cost-cutting, coupled with Commerzbank's €3.4bn in baseline profit before taxes, could drive a 37% increase in UniCredit's group profit before taxes and a 29% uplift in net profit. The resulting banking giant would hold approximately €1.3tn in assets, nearly €700bn in loans, and €875bn in deposits, with Germany playing a central role in the merged entity's business.


However, the merger faces potential regulatory hurdles and political challenges. Germany's finance minister, Christian Lindner, has warned that hostile takeovers harbor great risks, emphasizing the importance of stability for such a critical part of the German banking sector. The German government, which still owns a 12% stake in Commerzbank, remains cautious about the takeover bid, with Chancellor Olaf Scholz describing it as an "unfriendly" and "hostile" attack.

The broader implications of UniCredit's expansion plans beyond Commerzbank remain to be seen. France's largest lender's statement highlights the need for European banks to consolidate and become more competitive in the global banking landscape. As the European Commission continues to promote banking union and capital markets integration, the future of European banking will likely be shaped by a combination of strategic mergers, regulatory changes, and political pressures.