ECB Promises Banks It Will Do More In Urge to Merge

Europe’s top banking supervisor has sought to persuade more of the region’s lenders to merge by clarifying its approach to takeovers in an effort to reassure executives that such transactions will be encouraged, the Financial Times reported. European banks have fallen further behind their US and Chinese rivals in profitability and size since the 2008 financial crisis, prompting officials at the European Central Bank to make regular appeals for the fragmented sector to consolidate. In its latest effort, the ECB on Wednesday published a guide to how it would handle banking deals in three key areas, all of which it believes may have been perceived in the past as hurdles to lenders considering a merger. The supervisor said it would recognise the accounting gain — known as negative goodwill, or “badwill” — that can be generated when a bank buys a rival for less than the fair value of its assets minus its liabilities. Read more

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