IMF throws support behind bank mergers in Europe

The International Monetary Fund (IMF) said Thursday that it welcomes mergers between European banks to better finance innovative companies, although it declined to comment on talks of a tie-up between Commerzbank and Italy’s UniCredit.

“That has been our recommendation, that these mergers should take place,” said Alfred Kammer, director of the International Monetary Fund’s European department.

At a press conference, he added that “larger pan-European banks” are needed, not just national players in the European Union’s 27 countries.

“One way of doing it is through merger and consolidations,” said Kammer, while adding that the IMF would not comment on individual transactions.

UniCredit has taken Germany by surprise by building a position in Commerzbank equivalent to around 21 percent since early September, sparking speculation of a possible takeover.

In Germany, unions and politicians have voiced concern that an acquisition of the country’s second-largest lender could bring job losses and curtail lending to its small and midsize businesses.

But for years, European policymakers have pushed for deeper integration of eurozone financial markets, saying this is needed to create financial institutions capable of competing globally.

UniCredit CEO Andrea Orcel has said openly that he sees “potential in a merger” with Commerzbank.

Such a merger would create Europe’s eighth largest banking group in terms of balance sheet, behind Switzerland’s UBS and Germany’s leading Deutsche Bank, according to Bloomberg.

Last month, European Central Bank president Christine Lagarde said cross-border banking mergers in Europe were “desirable” to boost the banks’ competitiveness.