The European Commission wants to strip away political interference in European Union banking mergers and clear the path for cross-border banking inside the bloc, all in the name of helping EU banks compete with larger U.S. rivals. The Brussels apparatus is once again treating concentration as progress, and calling it competitiveness.
Scale for banks, not for people
An EU executive report released on Friday said internal barriers are stopping EU banks from expanding and leaving them at a disadvantage to U.S. lenders that have benefited from economies of scale in a more integrated U.S. market. EU mergers, the report said, remain largely trapped within national borders. That’s the old map of Europe in financial form: national capitals guarding their own lenders, the Commission pushing for bigger balance sheets, and ordinary people left to live with the fallout.
The report said, "This leads to an outcome where many banking groups in the EU are large relative to the size of their home economy, but not relative to the size of the EU or the banking union economy or international competitors." It added that unjustified national interventions in cross-border bank mergers were preventing banks from acquiring scale at the EU level to reach a critical size. The language is technocratic, but the direction is plain enough. More consolidation. Fewer obstacles. Bigger institutions with more reach.
The criticism comes after Germany rejected in June an offer from Italy's UniCredit to take over Commerzbank. UniCredit began its pursuit of Commerzbank back in September 2024, but has faced strong opposition, showing how difficult it is to force through cross-border banking deals in Europe when national governments decide a lender should stay under their own flag. Germany officially cited the price offered by the Italian bank as the reason for its rejection, but the government also made clear that Commerzbank is a key lender to German companies and should remain under German ownership.
Brussels versus national flags
A senior EU official said, "It is a mistake from our point of view. If it's okay by the supervisor and the competition authority, cross-border mergers are good things," adding that U.S. banks were outcompeting European peers across many business lines in Europe. The official said, "The main driver of competitiveness is not the rulebook ... it's the absence of scale." That’s the Commission’s creed in one sentence: bigger banks, fewer barriers, and the rest of society expected to accept the bill.
The EU executive, the report said, will propose a range of measures in the first quarter of 2027. Those measures include plans to crack down on EU members that breach EU rules limiting the circumstances under which they can intervene in proposed mergers. Other proposals would allow cross-border banking groups to meet capital and liquidity requirements more at the parent level, rather than the current system with additional requirements for subsidiaries. Removing such constraints could release €230 billion ($263.1 billion) of liquid assets, the report said. When the bloc talks about releasing assets, it means freeing capital for the banks, not freedom for anyone else.
The merger machine keeps moving
The report also said the EU will replace its proposal from a decade ago to create a European deposit insurance scheme with a new plan to simply deposit insurance measures in the bloc. That’s the kind of institutional shuffle Brussels loves: a new label, a familiar architecture, and the same basic promise that the system can be made safer without asking who it serves.
The banking industry gave the report a mixed reception. French banking lobby FBF described it as containing "several positive orientations" but said concrete measures were required, including better regulatory coordination and limits on country-specific rules. Christian Sewing, Deutsche Bank CEO and president of the Association of German Banks, urged swift action, calling for adjustments to the lower limit on capital requirements known as the output floor, relief for trade finance and improvements on software investments, as well as a review of financial stability buffers. The lobbyists and executives know exactly what they want: fewer constraints, more room to expand, and a regulatory order that bends toward the biggest players.
The whole exercise lays out the EU’s economic logic in clean, ugly form. National governments defend their own champions. The Commission pushes for a larger banking union economy. The banks want scale. The language is about competition with U.S. rivals, but the machinery is about concentration, control, and who gets to decide the shape of finance across Europe. The people who will live with the consequences don’t get a seat at the table. They never do.