European banks seek alternative cross-border expansion strategies, Morningstar DBRS says

Banco de Sabadell

Today 11:24

MILAN, Oct 22 (Reuters) - Uneven European banking regulation, national barriers to liquidity and capital and political opposition to foreign takeovers have pushed European banks to seek lower-profile ways to grow abroad, credit rating agency Morningstar DBRS said on Thursday.
European lenders have stepped up cross-border investments, though UniCredit's CRDI.MI takeover offer for Commerzbank CBKG.DE remains an exception, Morningstar DBRS said in a note
With the European Union's banking union project on a stall, lenders are turning to minority stakes, joint ventures and partnerships rather than full mergers
Minority stakes, the most visible route according to the credit agency, sometimes near the mandatory takeover threshold or stay below 10% to avoid both European Central Bank authorisation and a stricter capital treatment
France's Crédit Agricole CAGR.PA raised its stake in Italy's Banco BPM BAMI.MI to 29.3% in July, after agreeing in June to acquire 9.9% of Spanish peer Banco de Crédito Social Cooperativo
In October, unlisted French cooperative banking group BPCE bought around 7% of Spain's Banco Sabadell SABE.MC, saying it would not raise the stake above 9.9%
UniCredit raised its holding in Alpha bank ACBr.AT to around 29.8% in January, after initially buying 9% of the Greek bank in 2023
Banks are also using joint ventures or bank-insurance deals, Morningstar DBRS said, citing the recent partnership between National Bank of Greece NBGr.AT and Allianz ALVG.DE
"These actions offer a lower-risk route to diversify earnings ... however, they provide limited management control and still consume capital", it said

(Reporting by Valentina Za; Editing by Xevi Fontdegloria)
((valentina.za@thomsonreuters.com))