The European Union’s financial chief has voiced frustration over growing obstacles that are preventing the creation of larger, more competitive European banks. The remarks came after Italian lender UniCredit’s attempts to acquire Germany’s Commerzbank faced strong resistance in Germany, reigniting the debate over how far EU nations are willing to go in allowing cross-border mergers.

Maria Luis Albuquerque, the EU Commissioner for Financial Services, said it was disappointing to see how political and regulatory hurdles continue to block major banking deals in Europe. She noted that preventing such mergers limits Europe’s ability to build financial institutions strong enough to compete globally, especially with American and Asian banking giants.

Albuquerque was speaking during her visit to Italy, where she met with top officials including the Governor of the Bank of Italy, Fabio Panetta, and the country’s Economy Minister, Giancarlo Giorgetti. During her interview with Italy’s RaiNews24, she expressed concern over the use of certain national powers that could discourage mergers between European banks.

Her comments came in the context of Italy’s use of its “golden power” law — legislation that allows the government to block or impose conditions on deals involving strategic sectors, including banking. While the law was designed to protect national interests, it has increasingly drawn criticism from the EU for potentially violating single-market rules.

The issue gained attention after UniCredit abandoned its plans to acquire Banco BPM earlier this year, citing government-imposed conditions. Reports suggest that the European Commission is preparing to take action against Italy’s golden power framework, possibly launching an infringement procedure if no compromise is reached. Negotiations are currently underway between Rome and Brussels to find a middle ground that avoids a formal dispute.

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The Right Of Member States

Italian Prime Minister Giorgia Meloni has defended the right of member states to maintain exclusive control over national security matters, suggesting that such powers are essential for protecting domestic interests. However, Albuquerque emphasized that merger deals with broader European implications should ideally be reviewed at the EU level to ensure consistency and fairness across all member states.

Sources familiar with the discussions say that a final decision by the EU Commission could come in mid November. If Italy refuses to withdraw the contested conditions, it may challenge the EU’s order in court, setting the stage for a high-stakes legal battle over where national sovereignty ends and EU authority begins.

The dispute highlights a long-standing tension within the European Union, balancing national control with the goal of building a unified and competitive financial market. As Europe seeks to strengthen its banking sector amid global competition, how this issue is resolved could set an important precedent for future cross-border mergers.

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