If consolidation is the future of banking, why, asks David Lascelles, are there so few cross-border deals?
The conventional wisdom seems to be that we are in for another wave of consolidation in the banking market. The big difference this time is that the mergers will not be just domestic, but cross-border. But these expectations are built on logic and speculation, rather than business experience, and we should treat them with caution; the history of cross-border banking mergers is bloody and little has really changed. The logic is certainly there. The banking powers, particularly in Europe, are keen to see consolidation because they think it will make banks more efficient and promote international trade. Banking markets are also converging: they increasingly use the same technology and conform to similar rules and regulations. We all buy foreign cars, cameras, clothes, yet we continue to bank locally. It all needs to change. But does this add up to a market ripe for major structural improvement? The short answer is no. This logic only covers a few of the many issues that banks confront whe
