'Still room' for Italian consolidation, says Draghi

5 February 2007

The governor of the Bank of Italy, Mario Draghi, has said that the Italian banking sector still has room for consolidation, although law-changes were needed to make takeovers easier.

Speaking at a banking conference in Turin over the weekend, Mr Draghi said that despite the recent rush to consolidate the Italian banking industry in recent months, there was still room for further takeovers of small banks by their larger rivals.

"The recent consolidation, though large in size, changes only slightly the degree of concentration in the entire industry, because of the fragmentation that remains." Mr Draghi told the conference.

Consolidation of the market has been seen as an effective defense strategy to protect the market against foreign competition.

Italian banks were involved in $485 billion-worth of mergers last year, with the combining of Intesa and Sanpaolo banks (previously the second and third largest in the country) one of the biggest.

However, Mr Draghi warned that without changes to the banking laws, mergers involving the country's large cooperative banks could be difficult.

Cooperative banks currently have voting procedures that protect them from unwanted takeovers.

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