Its CEO Bank of Piraeus Christos Megalou, participated in a discussion on The 2025 Horizon: Lessons for Leadership and Fundamentals for Growth, a conference of Financial Times Global Banking Summit 2024, held in London on Wednesday (4.12.2024).
Answering questions at the Financial Times conference, Piraeus Bank’s advisor said that competition in the international banking sector is increasing and this is good because it is reshaping the financial landscape, but without much impact on the financial result. FinTech companies are expanding their presence and offering, often at a lower cost and with greater convenience, attractive services especially for younger, tech-savvy consumers.
This competition is pushing banks to innovate, improve customer experience and invest in digital transformation. He mentioned, as an example, the creation of the first Greek neobank with a full European banking license, Snappi, from Piraeus in collaboration with the technology company Natech.
Regarding the global banking system, he pointed out that the last 2 years have been the best for the industry since the financial crisis of 2008. In 2023, the net income of the global banking sector was 1.15 trillion. dollars and it was approximately as much as those of the energy and industry sectors combined, which are next in revenue.
Asked about the prospect of cross-border mergers in the European Union, he stressed that they face challenges mainly due to the fragmentation and differences that exist in the regulatory environment from country to country, with the result that banks focus mainly on domestic mergers and organizations such as Banco Santander and CaixaBank to expand through national acquisitions. Even UniCredit’s proposal for Commerzbank is more of a domestic rather than a cross-border deal, he said.
The complexity and capital requirements of the different national regulatory frameworks in Europe are a barrier to acquisitions and mergers, while on the contrary, American banks proceed with mergers since they are generally subject to fewer regulatory restrictions than European banks, which allows them to maintain higher price to book value (P/B) ratios and as a result better operational efficiency.
Divergence in European countries’ regulatory environment also affects market valuations: European banks often trade at P/B ratios below 1, reflecting both market skepticism about their ability to generate returns and tight rules they face. In contrast, US banks often trade at P/B ratios above 1, with some large institutions such as JP Morgan Chase and Goldman Sachs ranging between 1.2 and 2.
In contrast to the obstacles to acquisitions and mergers in the European area, Mr. Megalou estimated that there will be progress in the European integration of the capital markets. More generally, consolidation in the European banking sector is a development that depends on the balancing of the strategic “ambitions” that the banks themselves have with a series of political, regulatory and market-related factors.
As far as Piraeus is concerned, the priority is given to credit expansion in Greece, to utilize its liquidity and funds, having achieved a 10% increase in 2024 and aiming for high single-digit loan growth in the coming years. “According to our strategy, we evaluate the strategic opportunities that present themselves with the aim of promoting sustainable development and executing our business plan, diversifying our sources of income,” emphasized Mr. Big.