The European Commission has unveiled plans aimed at making cross-border banking mergers easier and reducing member states' powers to protect national banks from foreign takeovers.
Announcing the legislative proposal yesterday, internal market commissioner, Charlie McCreevy said: "These new rules mean that supervisory authorities will have to be clear, transparent and consistent when assessing cross-border mergers and acquisitions."
The new rules would make it more difficult for governments to meddle with mergers in the banking, security and insurance sectors, by requiring that foreign bids are assessed according to a set list of criteria.
Among the criteria would be the reputation of the takeover company, the reputation and experience of the person who would eventually run the merged company and the financial soundness of the acquiring company.
In addition, national authorities would have to check the potential takeover company for compliance with relevant EU laws as well as for the risk of money laundering and terrorism financing.
The new proposals also reduce the time during which national watchdogs can examine mergers from three months to 30 days and allow national authorities to stop the merger process just once.
Under current EU rules, national authorities are able to block proposed mergers if they consider the "sound and prudent management" of the target company could be put at risk. This loose wording was open to abuse from protectionist states.
"[ The proposals] leave no room for political interference or protectionism," said Mr McCreevy in a veiled reference to Italy and Poland, both of which have tried to block foreign takeovers of domestic banks in recent times.
Last year, the commission took legal action against Italy over the role of its central bank in the takeover battle for Banca Antonveneta. Italian central bank governor Antono Fazio, who resigned in the wake of the furore, was seen as favouring Italian Banca Popolare Italiana over Dutch group ABN-Amro and Spanish bank Banco Bilbao Vizcaya Argentaria in the takeover battle for Banca Antonveneta.
Mr McCreevy's proposals are set to test whether national governments are really prepared to agree to tighter financial regulations as the proposals have to be approved by the European Parliament and member states before coming into force.
