FRANKFURT, Sept. 8 (Xinhua) -- European banks should take advantage of Europe's economies of scale to remain competitive globally, Christian Sewing, chief executive officer (CEO) of Germany's Deutsche Bank, told an event on Wednesday.
"The importance of size in the financial world is increasing exponentially," he said at the Handelsblatt Banking Summit 2021. While it remains necessary to regulate big banks, in Europe a lot has been done to prevent banks from "growing up."
According to Sewing, European banks have fallen behind on the global stage over the past two decades. Nowadays, JP Morgan and Bank of America alone are worth as much as the 18 largest European banks combined, he said.
Sewing stressed the urgency to further strengthen the internal market in Europe, which includes the completion of a banking and capital markets union, and to accelerate overdue consolidation across national borders. "We can no longer afford an evolutionary path. A big leap forward is needed here," he said.
Silvia Schmitten-Wagenbach, chief operating officer at Barclays Germany and chair of the Association of Foreign Banks in Germany, also spoke about the need for cross-border mergers between European banks. She argued that the fragmented European banking market, often subject to different national rules, is the major obstacle to cross-border mergers.
According to Sewing, European banks also face challenges such as regulatory imbalance between banks and non-banks, including fintech companies and big techs. If European banking rules become too strict, the businesses targeted by regulators will only migrate into other financial areas, he said.
The banking summit, organized by the German newspaper Handelsblatt, will last until Friday. It brings together German and international banking executives, new market players, regulators and government officials to discuss how the banking sector could remain profitable and emerge stronger from the pandemic-induced crisis.