PARIS Europe's banking sector will be ripe for consolidation once international bank regulations currently being thrashed out are finalised, ECB governing council member Francois Villeroy de Galhau in a newspaper interview published on Friday.
The Basel Committee, made up of regulators from nearly 30 countries, is in the final stages of drafting recommendations for how much capital banks have to hold to remain solvent.
However, European countries with big banks are concerned that the proposals as they stand might put their lenders at a disadvantage.
Villeroy said in an interview with Italian daily Corriere della Sera that Italy, France and Germany were pushing for rules that would not require significantly higher levels of capital.
"Once the (regulatory) framework is cleared up, it would be desirable to make progress on creating cross-border institutions in Europe," Villeroy, who is also governor of the Bank of France said.
"That would allow for savings to circulate better in Europe to the advantage of companies," he added.
Some bankers say regulatory uncertainty over how much capital banks will need to stump up in the future to cover their risks is a major obstacle to consolidation in Europe's fragmented banking sector.
(Reporting by Leigh Thomas)