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By Vicki COCKBAIN, Investment Director, Aberdeen Standard Investments
On the face of it, European banks look ripe for MA. According to the European Banking Federation, there are some 4,769 credit institutions in the Eurozone. And with so much competition in such a fragmented market, it is very difficult to be profitable. The average return on equity for Eurozone banks is just 5.6%, compared with a cost of equity estimated at above 10%.
So consolidation looks like a no-brainer. It would cut costs, create economies of scale and provide opportunities for diversification, bringing higher profits in the process. Regulators have been talking up the prospects for mergers for a long time and consolidation is all but inevitable at some point. But...
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