"Five years from now, financial services will be virtually unrecognizable. The industry, like airlines and aerospace before it, will be dominated by a handful of national and global giants that will dwarf even the biggest players we know today." Although that's how consultants McKinsey predict developments in banking and insurance, it only echoes what every bank CEO is saying, in public or private. And they have very little time in which to answer the questions this trend raises: What is our role? Do we have the management talent to be a buyer? Should we give up and sell to the highest bidder?
At the mega-bank end of the scale managements are embracing gigantism wholeheartedly and the process seems to be gathering pace. In April alone Citicorp's announcement that it is to merge with Sandy Weill's Travelers Group stood out - but only just - from BankAmerica's decision to join forces with NationsBank, BancOne's marriage to First Chicago, Royal Bank of Canada's tie-up with Bank of Montreal and the combination of CIBC with TD Bank. Things are hotting up in Europe's less flexible markets too. Formal approval has just been given for the merger of Istituto San Paolo di Torino and IMI and Credito Italiano is to merge with Unicredito.