Morningstar DBRS: European banks seek alternative strategies for international expansion

Uneven banking regulation across Europe, national barriers regarding liquidity and capital, and political opposition to foreign takeovers have led European banks to pursue less overt methods for expanding abroad, according to a report by the credit rating agency Morningstar DBRS, as reported by Reuters.

European lenders have stepped up cross-border investments, though UniCredit's takeover bid for Commerzbank remains an exception. With the EU's banking union project effectively stalled, banks are increasingly turning to minority stakes, joint ventures, and partnerships-rather than full-scale acquisitions-analysts at Morningstar DBRS argue, according to Agerpres.

According to the analysts, minority stakes represent the most prominent approach; these holdings sometimes approach the threshold that would trigger a mandatory takeover bid, or conversely, remain below 10% to avoid the need for European Central Bank authorization and more stringent capital requirements.

Examples cited include the French group Credit Agricole, which increased its stake in the Italian bank Banco BPM to 29.3% in July, following an agreement in June to acquire a 9.9% stake in its Spanish rival, Banco de Credito Social Cooperativo. In October, the French group BPCE acquired approximately 7% of the Spanish bank Banco Sabadell, stating that it would not increase its stake beyond 9.9%. In January, UniCredit increased its stake in Alpha Bank to approximately 29.8%, having initially acquired a 9% interest in the Greek group in 2023.

Furthermore, banks are utilizing joint ventures or bancassurance agreements, Morningstar DBRS noted, citing the recent partnership between the National Bank of Greece and Allianz.

"These moves offer a lower-risk path to earnings diversification; however, they provide limited managerial control and consume capital," assesses Morningstar DBRS.