Summary
- Proposal is intended to standardise grounds for approving or rejecting cross-border acquisitions of financial institutions across Europe
- An interesting aspect is the proposal to extend the rules to exchanges
- But it is only a proposal for a directive at this stage. Implementation will take years, so it won't affect any deals under consideration now.
Analysis
This proposal is intended to create a level playing field for financial sector acquisitions across Europe by defining a closed list of criteria that financial authorities can use when assessing a proposed merger. It would address the chaos caused by recent merger proposals for banks in Italy and Poland where the home country authorities wriggled apparently trying to find ways to preserve the autonomy of local players. Under the proposed directive this would not be possible.
However, the "reputation" of the proposed acquirer is one of the valid criteria against which a merger can be assessed and that is a sufficiently woolly concept to allow room for argument.
Another important aspect of the proposal is the suggestion that its scope could be extended to include exchanges, on the grounds that they should be treated equally with other financial institutions.
But remember that all of this is only a proposal for a Directive. It still needs to get turned into a draft directive, which needs to go through the european ratification process and then get implemented in national legislatures. On average this takes several years, so it won't be on the statute book in time to afect any M&A activity currently under consideration.
