A mooted tie-up between France's Société Générale SA and Italy's UniCredit SpA, two of Europe's largest banks, could be a game-changer for cross-border M&A in the continent's finance sector.
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Regulators and banking executives alike have been pushing for such deals, and SocGen CEO Frédéric Oudéa has predicted that in 10 years' time, the fragmented European banking market will resemble that of the U.S., where a few large diversified companies dominate.
According to a June 3 Financial Times report, SocGen and UniCredit have both been considering a merger, which would create Europe's fifth-largest bank in terms of market capitalization.
S&P Global Market Intelligence data shows that Paris-based SocGen is the larger bank by assets and branches, but that UniCredit, based in Milan, has a bigger market cap and more loans extended.
The two banks have complementary branch networks; each has little or no presence in the other's domestic market, and SocGen offers a large Polish exposure while UniCredit has a greater presence in German-speaking Europe.
But analysts speaking to S&P Global Market Intelligence point out that banks have found it difficult to derive synergies from cross-border deals.
Beyond the practical challenges, a combined SocGen-UniCredit entity may not end up being an investment banking powerhouse, and would not have so much to gain in terms of digital banking development as both firms are already successfully making that transition, they said.

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