European banks pursue lower-profile cross-border expansion strategies

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European banks cross-border strategies

Highlights

European banks are shifting international expansion to minority stakes, joint ventures, and partnerships due to uneven regulation and opposition to foreign takeovers, per Morningstar DBRS.
Recent deals include Crédit Agricole raising its Banco BPM stake to 29.3%, BPCE acquiring about 7% of Banco Sabadell, and UniCredit increasing Alpha Bank holding to 29.8%.
Low-profile cross-border moves such as bancassurance partnerships, exampled by National Bank of Greece and Allianz, allow earnings diversification but offer limited control and continue consuming capital.

Cross-border growth shifts to minority stakes and partnerships

As reported by Reuters, Morningstar DBRS said uneven European banking regulation, national barriers to liquidity and capital, and political opposition to foreign takeovers are pushing banks toward less visible forms of international expansion.

The credit rating agency said cross-border investments are picking up, although UniCredit's takeover offer for Commerzbank remains an exception. With the European Union's banking union project stalled, lenders are favoring minority holdings, joint ventures and partnership structures instead of pursuing full-scale mergers.

Morningstar DBRS described minority stakes as the most visible route. In some cases, banks build positions close to mandatory takeover thresholds or keep them below 10% to avoid both European Central Bank authorization and stricter capital treatment.

Recent deals show limits and trade-offs

Recent transactions illustrate that approach across several markets. Crédit Agricole raised its stake in Italy's Banco BPM to 29.3% in July, after agreeing in June to acquire 9.9% of Spanish lender Banco de Crédito Social Cooperativo.

In October, French cooperative banking group BPCE bought about 7% of Spain's Banco Sabadell and said it would not increase the holding above 9.9%. UniCredit raised its stake in Alpha Bank to around 29.8% in January after initially buying 9% of the Greek bank in 2023.

Banks are also using joint ventures and bancassurance arrangements, with Morningstar DBRS citing the recent partnership between National Bank of Greece and Allianz. The agency said such moves offer a lower-risk way to diversify earnings, but they provide limited management control and still consume capital.

In our earlier article on the IMF’s October forecasts for Europe, we noted that the region’s recovery remains uneven, with stronger momentum in Germany, the UK and Spain, while France continues to lag. We also highlighted how persistent inflation risks, tight fiscal constraints and competitiveness gaps are influencing credit market sentiment and borrowing conditions—factors that feed into how banks assess cross-border expansion and risk.

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