Forget Italy. Germany is still the biggest banking problem in Europe; not just because the market itself is poor and destabilizing but also because it negates the possibility of a world-beating continental banking sector. Germany is Europe’s heart: geographically, economically and strategically.
There will be no convincing claim to continental dominance without big market shares in both Germany and France. This is why the French are on the offensive and why Germany remains the battlefield of European banking – even though it is barely worth fighting over.
It was arguably Jean Pierre Mustier’s biggest achievement that the French chief executive managed to bring UniCredit back from the brink last year with a €13 billion rights issue – without having to sell the Italian bank’s German arm, HVB.
All the big bank mergers under discussion today have Germany at their heart. A Deutsche Bank/Commerzbank merger would be a game changer, particularly if it gave way to a merger between Société Générale and UniCredit and later perhaps a deal involving any of those banks and BNP Paribas.
French banks lead way
After UniCredit, the French (alongside ING’s online retail-orientated business) are the biggest foreign banks in Germany.
