European Consolidation

Why France, not Germany, could control European finance

53481853 Paris skyline Reuters
It may have some broader economic challenges, but France's finance sector is rising up the ranks. Source: Reuters

If continental Europe wants to compete, it could use some bigger companies. That was the conclusion French Finance Minister Bruno Le Maire in a recent interview. While he didn’t specify every sector he was thinking about, it’s a sentiment that could certainly apply to the world of finance.

That sentiment was backed on Monday by Christian Sewing, head of private banking at Deutsche Bank. Europe needs financial firms that can compete on equal footing with US rivals like JP Morgan and Goldman Sachs, he said at a financial conference in Frankfurt. No doubt that remains a goal for Mr. Sewing’s employer, which rose to become a top 5 global investment bank in the 1990s and early 2000s, but has been forced to suspend those ambitions over a painful past few years of restructuring.

Mr. Sewing should be careful what he wishes for. While Deutsche Bank continues to look inward, it could well be banks from another country that take up the mantle he suggests. Just look at Mr. Le Maire’s France, which has seen its banking sector quietly transition from a possible problem child to a profitable powerhouse at the center of European banking.

While Germany may still be Europe’s powerhouse economy, France has quietly been leveling the playing field in finance over the past few years. It’s a battle for dominance that has become all the more important in the age of Brexit, with Frankfurt and Paris vying to take at least some banking business away from London.

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