year, a lot of Europe-watchers predicted it would trigger a wave of cross-border mergers.
Mergers in Europe have indeed picked up, but mostly in the form of in-market mergers in Spain, Germany, France, and Italy. When it comes to cross-border deals, European bankers delicately acknowledge there are still many obstacles and prefer to talk about "strategic alliances."
Both Banque Nationale de Paris and Germany's Dresdner Bank, for example, have been making noises about a strategic alliance. Spain's Banco Bilbao Vizcaya, which just announced a merger with Argentaria SA, holds a 10% stake in Italy's Banca Nazionale del Lavoro SpA, and is in talks to create an alliance with UniCredito Italiano SpA, Italy's third-largest bank. The Netherlands' Rabobank Nederland and Germany's Deutsche Genossenschaftsbank this month agreed to jointly run their corporate and investment banking businesses.
Daniel Bouton, chairman of France's Societe Generale, speaks openly of alliances. So does Jan Kalff, chairman of the Dutch giant ABN Amro, which has acquired minority stakes in Italian banks and talks about "doing something together" with Societe Generale.
History shows that strategic alliances and consortiums, slightly more formal, usually produce only a minor increase in profits and then quietly die.
"They haven't worked out that well, because if they do, the banks try to bring in the business for themselves," said Paul Nadler, professor of finance at Rutgers University School of Management.
The classic example, he said, is European-American Bank, a U.S. retail and small business banking consortium set up by six European institutions in 1972.
That arrangement collapsed after its members Germany's Deutsche Bank, Belgium's former Generale Bank, France's Societe Generale, the Netherlands' Amsterdam-Rotterdam Bank, Austria's Creditanstalt Bankverein, and Britain's former Midland Bank PLC -- couldn't decide on a strategy. ABN Amro, the successor to Amsterdam-Rotterdam Bank, bought out the other partners in 1991.
Europartners Securities Corp., an investment banking consortium set up in the late 1970s by France's Credit Lyonnais, Germany's Commerzbank AG, Italy's Banco di Roma, and the former Banco Hispano Americano (now part of Banco Santander Central Hispano) also evaporated. So did Libra Bank PLC, a London-based consortium that 10 banks including Chase Manhattan Corp., which took a 23.6% stake -- set up in 1972 to develop business in Latin America.
Alliances between European and U.S. banks also have fallen by the wayside. Britain's Standard Chartered PLC, for example, set up a strategic alliance for trade finance and other corporate banking services with the former First Interstate Bank. That deal fell apart after Wells Fargo & Co. acquired First Interstate. The new Wells Fargo has a similar alliance with London-based HSBC Holdings PLC for trade finance.
Charles Coltman 3rd, chairman of the Philadelphia region for Cleveland-based National City Bank and former vice chairman in charge of international operations at First Union Corp., said he thinks the main reasons that most strategic alliances and consortiums fail are that no one is really in charge and goals are not defined.
He said he's even more skeptical about cross-border banking alliances and mergers.
"Americans are just starting to learn about the cultural difficulties in implementing major mergers, and we've got one country and one language," Mr. Coltman said. "Think about how much more complex these arrangements are going to be in Europe."
