This dissertation was written as part of the LLM in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation at the International Hellenic University.
The Covid-19 pandemic is the worst of all the crises that we had been experiencing until now, on a global level. The impact has been tremendous with multiple social and economic dimensions. Although contingency measures such as social distancing, quarantine, border shutdown are deemed to be necessary in the effort to “flatten the curve”, the interruption of the real economy cannot be disregarded. Additionally, a lot of concerns have been raised as regards a looming recession.
Fortunately, at the point the pandemic emerged, European Banks were in a better position compared to the previous crisis, yet, a number of deficiencies still exist in the sector, which have been the reason for the slow recovery after the GFC and thus low profitability.
Given the dimension of the phenomenon, it is unlikely that the banking industry will remain unscathed. Fiscal and monetary policies can manage to tackle the situation, at least for the time being, but they cannot certainly provide profits for banks.
In this context Consolidation (both domestic and cross-border) through mergers and acquisitions, can be an effectual channel to manage and confront the existing vulnerable aspects of the sector. Domestic consolidation could be an adequate response, for instance, to overcapacity, poor profitability issues or legacy problems (NPLs) , respectively cross – border consolidation could contribute to a more resilient banking system in terms of risk diversification, risk sharing and simultaneously facilitate deeper banking integration, which can be the foundation for the safe and sound banking system the European Union and the Eurozone need , in order to attain financial stability, a prerequisite factor in order to confront any future downturn in economic cycles.
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