The combined expertise and networks of the two banks could create a truly global competitor to the giant American and Chinese banks.
Any such deal will be a major challenge, but 15 years on from the financial crisis, all UK banks are in a much better financial position than they have been in for more than a generation.
At the moment the UK market is stagnant and offers few opportunities within itself, and without expanding into new markets it will be difficult to continue growing. To make matters worse, the megabanks established on the continent will soon have their sights set on the UK.
Of course, bank mergers have an unpopular reputation in Europe, and the collapse of the Royal Bank of Scotland after a series of over-ambitious acquisitions during the 2008-09 financial crisis is remembered as a cautionary tale against trying to seize control of a rival.
That said, the successful merger of UBS and Credit Suisse shows that mergers can succeed, even if it comes as a result of the Swiss government holding a gun to both parties’ heads.
The surprisingly successful merger between the two companies has seen UBS shares rise 58% over the past 12 months.
Meanwhile, JPMorgan’s expansion shows that economies of scale still work, and its absorption of rivals such as Silicon Valley Bank during last year’s mini-crisis suggests the company can further extend its dominance in the U.S. market. When done well, bank mergers can still be an easy way for anyone to make money.
To be sure, Macron has all the permutations of the EU in mind, and no doubt hopes that a French-led European hegemon will emerge, headed by a French banker and based in Paris.
If he takes control, Société Générale would buy Santander, BNP Paribas would buy Deutsche Bank and perhaps one of the Spanish or Italian banks as well.
Any British bid for one of the continent’s major banks would likely be rejected on the grounds that mergers are only allowed between banks already based in the eurozone.
But one thing is certain: while Macron may have deliberately started this process, it will be difficult for him to control or remain fully in charge of what happens next.
If the government is encouraging a wave of consolidation, Britain’s big banks should be ready to join in – or risk being left behind.
