Italian lenders UniCredit and Capitalia yesterday inked a $29.7 billion deal to create a bank with the world's fifth (and Europe's second) largest market cap. The hurried Rome merger indicates, according to the Wall Street Journal, a rush to consolidate Europe's banking sector, but also the persistent challenges to cross-border deals within the EU.
Capitalia resisted proposals from banks in Spain and Holland, while UniCredit abandoned negotiations with France's Société Générale because of political opposition across the Alps. "We are still trying to create a common European market," a senior UniCredit executive conceded. "Cross border deals are always difficult."