CHIEF executives of Deutsche Bank, Societe Generale and Unicredit have defended the need for large banks even as global regulators seek to force lenders with large balance sheets to shrink.
SocGen chief Frederic Oudea said large banks were needed to maintain Europe’s capacity to finance large companies and its infrastructure.
“On these markets, the capacity to take this underwriting risk, scale matters. I believe that we need players which are able to tell the credit story of European companies or governments,” Oudea told a banking conference in Frankfurt.
Unicredit boss Federico Ghizzoni said only banks with a certain size could afford to make investments.
“How to combine these forces and balance it with ‘too big to fail’, will be one of the challenges of the banks’ management of tomorrow,” Ghizzoni said, referring to the problem of how to shelter taxpayers from having to stump up for a major bank bailout.
While some banks are too big to be allowed to fail, Deutsche Bank co-chief Anshu Jain said there was a need for scale so banks can operate on a global basis.
“There is a minimum scale for efficiency. It is a little misleading to think you can be small and globally competitive,” he said.