The single market for financial services seen from Berlin

«(...) using a bank account opened in one EU country while living in another is surprisingly troublesome, even if both use the euro. In theory Europeans, like their American cousins, live in one large single market, free to contract services from business based anywhere in the bloc. In practice payment systems sometimes accept only cards issued by local banks—and good luck getting your Finnish bank to fund a Spanish mortgage. Finance is where the European ideal of a seamless union often falls shortest.

The limits of the European single market were sharply exposed this month as UniCredit, an Italian bank, has made moves to take over Commerzbank, a German rival. A proposed transaction that should have been of interest only to finance wonks—UniCredit and Commerzbank are the EU’s 10th- and 17th-biggest lenders, respectively—devolved into an ugly nationalist mêlée. Olaf Scholz, the German chancellor, took time out of his geopolitical agenda at United Nations meetings in New York to thunder against “hostile” Italian bankers on the prowl. Just two weeks ago the EU released a much-hyped report by Mario Draghi, a former Italian prime minister, proposing to juice economic growth in Europe by deepening its single market. A resounding nein has put paid to his plans before most people were done reading its 400 pages.

European chauvinism has long had a way of derailing businessmen’s best-laid takeover plans. In 2005 France fended off a bid for Danone, a yogurt-maker, on the grounds that it was strategically vital. But that would-be buyer was American. Surely takeovers by firms from other EU countries should be treated more sympathetically, the better to build European champions with the critical mass to compete globally? Apparently nicht. Because Commerzbank lends to Mittelstand firms and exporters, the German establishment has put it on an economic pedestal; some see it as a national treasure they would rather close down than hand over to grubby Italians. (This is rather amusing to finance aficionados—including your columnist, a former banking correspondent—who recall when the lender was dubbed “Comedybank”, thanks to its knack for losing money in a dazzling array of hare-brained lending decisions.) UniCredit’s stake was in part bought straight from the German authorities, who bailed out Commerzbank in 2008. In contrast UniCredit is well run and more profitable than its target, thanks in part to a German unit it already owns. (...)»

A banking raid in Europe kicks up an unseemly nationalist defence