Bank Consolidation: Are Treasurers Right to Worry?

It now seems to be only a matter of time. The ECB is currently reviewing the formal requirements for UniCredit’s takeover of control at Commerzbank.¹ Treasurers with double exposure are eyeing their credit portfolios with concern: when it comes to credit limits, one plus one rarely equals two. Looking ahead, a reduction in financing volumes is feared – in a market environment where consolidation among major bank players is also on the agenda.

Decades of Consolidation

At the start of the year, Erste Group secured a majority stake in Santander Bank Polska. In Switzerland, the takeover of Credit Suisse resulted in UBS now accounting for nearly 40% of the total balance sheet assets of Swiss banks.² The European banking market already looks back on a long history of consolidation. Since the start of the monetary union, the number of banks in the eurozone has roughly halved due to mergers and acquisitions.³ The trend covers not only the major takeover battles but also regional banks, which have been steadily consolidating for many years. Economic distress sometimes accelerates mergers (most recently affecting several German cooperative banks with excessive real estate loan risks⁴), but mergers also happen without any immediate crisis pressure.

Does less competition necessarily have to be bad for market participants? At least when it comes to passing on interest rate changes on deposits, a recent study by the Deutsche Bundesbank provides empirical indication for this. An older Italian study also finds something positive in mergers: based on extensive data on Italian loan contracts, Paola Sapienza showed in 2002 that bank mergers within the same regulatory environment often enable efficiency gains and lower lending rates, as a broader spread of risk is achieved.⁵ This could also be how one interprets the proposal by former UniCredit CEO Jean-Pierre Mustier: in June, he floated the idea of merging HypoVereinsbank with Commerzbank. This would create a German “champion” within the same legal framework.⁶

Negative Effects Possible

Sapienza’s study also provides evidence of risks. When a bank with an already high market share acquires another, cost and efficiency gains for corporate clients can evaporate. This applies in particular to borrowers with a poorly diversified financing portfolio.

The study also shows that smaller companies are less likely to receive new financing after a merger due to changed lending strategies. This means that credit availability deteriorates for this group without their business having become any riskier.

For bigger corporate groups, large exposure limits can limit potential financing volume. This is especially true in situations where former competing banks merge within the same market. Given how many German mid-sized companies carry loans from both UniCredit and Commerzbank, their concern is justified: according to “Der Treasurer,” at the end of 2025 at least one of the two banks was involved in nearly 84% of syndicated loan volume; in almost 55% of cases, both were involved. In mechanical engineering and the automotive industry, UniCredit and Commerzbank each accounted for more than 80% of financing volume.⁷

A More International Setup

But the banking market is responding to the consolidation. In Switzerland, for example, UBS’s dominance is not only fueling debate about adequate capital buffers but is also reshuffling the deck across the rest of the banking sector: international banks are positioning themselves more strongly as partners for Swiss companies, while Swiss banks are broadening their range of services so as not to leave UBS as the sole player in the syndicated loan market. According to its own statement, the Swiss Raiffeisen Group recently took on the role of facility agent in a transaction for the first time.⁸ Similar developments can be observed in other markets.

In the medium term, companies can internationalize their network of financing partners and work toward a measured diversification of their capital providers – a step that those with good credit ratings can achieve fairly quickly. Consolidation in the banking sector could also be an opportunity for companies to prepare their structures, processes, and reporting for capital market requirements – a project that is usually long-term in any case.

And in the short term? Companies with double exposure to Commerzbank and UniCredit should take a close look at their existing agreements: how are voting majorities defined? Are there special provisions in case two lenders merge into a single entity? How are transfer clauses structured? Have voting right restrictions been established? The full financing portfolio needs to be considered here — a local bilateral loan from the Polish Commerzbank subsidiary mBank counts just as much as a UniCredit ticket in a Schuldschein transaction. Hardly a strategy — but it surfaces the immediate options for action, and the strategic priorities behind them.