The governor of the Bank of Italy, Mario Draghi, has said that the Italian banking sector still has room for consolidation, although changes in the law were needed to make takeovers easier.
Speaking at a banking conference in Turin recently, Draghi said that, despite the recent rush to consolidate the Italian banking industry in recent months, there was still room for further takeovers of small banks by their larger rivals.
“The recent consolidation, though large in size, changes only slightly the degree of concentration in the entire industry, because of the fragmentation that remains,” states Draghi.
Consolidation of the market has been seen as an effective defence strategy to protect the market against foreign competition.
Italian banks were involved in $485 billion-worth of mergers last year, with the combination of Intesa and San Paolo banks (previously the second and third largest in the country) being one of the biggest.
However, Draghi warned that without changes to the banking laws, mergers involving the country’s large co-operative banks would be difficult.
Co-operative banks currently have voting procedures that protect them from unwanted takeovers.