European banks are carefully watching Congress in hopes of a legislative change that would let banks own U.S. insurance companies, the chief economist for Dutch banking giant ABN Amro Holding said.
"The developments in this country would have an effect on Europe," said Robert A.R. van den Bosch in an interview in ABN Amro's North American headquarters here.
He said European banks would look to buy either U.S. insurers or European insurers that do business in the United States.
Virtually every European bank is evaluating itself, Mr. van den Bosch added, mostly because of the advent of the euro.
The banks are "looking at basic beliefs, basic philosophies, strategies," he said. "We are looking at the creation of very large, broad, deep financial markets."
The single currency would open European borders to competition and would create costly infrastructure investments that weaker players could not absorb. "Banks have to rethink their strategies and make an assessment of the new climate."
European banks could become enormous, Mr. van den Bosch said, including the possibility of the world's first $1 trillion-asset bank in France, if Banque Nationale de Paris is successful in buying Societe Generale and Paribas.
"Most players have come to the conclusion there is overcapacity in European markets, so it is only logical to expect a period of consolidation," Mr. van den Bosch said.
This is particularly true in France, Germany, and Italy, he said.
"The process began not yesterday and not last week," he added, noting that the merger between the companies that formed ABN Amro in 1990 was one of the first in European consolidation.
Mr. van den Bosch said mergers would result in improved competition, rather than too much consolidation.
"This will all lead to greater efficiency," he said. "I'm not inclined to think it will lead to two large players that will dominate to the detriment of their market."
Though Mr. van den Bosch declined to speak about ABN Amro's plans, chairman Jan Kalff said in an interview this month that his company would be an active player in European bank consolidation.