From the 2008 financial crisis until early 2024, the value of cross-border banking mergers in the EU remained relatively stagnant, with European banks maintaining a predominantly domestic focus. In fact, according to a report by the European Central Bank, the value of M&A transactions in the EU fell by approximately 66% between the pre-crisis decade and 2020. This long-term trend stands in stark contrast to the sudden increase in the value of EU bank merger deals between 2024 and 2025, during which the total value of cross-border banking deals rose from €3.4 billion to €17 billion. The latter figure represents the highest level since the €19 billion recorded in 2008, the year of the financial crisis. This time, however, the reason behind the sharp increase in cross-border EU mergers is more subtle, with new EU legislation playing a significant role.

A legislative explanation for the upward trend in mergers reveals how recent regulatory changes are pushing the EU toward a stronger eurocentric banking landscape. The key legislative development is the EU’s Capital Requirements Directive VI (CRD6), which entered into force on July 9, 2024, and is scheduled to take effect on January 11, 2027. CRD6 introduces a new licensing regime for “core banking activities,” including lending, credit agreements, guarantees, and commitments. Its most consequential provision is Article 21c, which requires non-EU banking institutions to obtain authorization and establish a branch in the relevant EU member state before commencing or continuing such activities.

As a result, many extraterritorial institutions—primarily banks based in the United States and Asia—may face temporary barriers to operating within the EU. The authorization and branch-establishment process is expected to be lengthy and administratively burdensome. Consequently, the EU could experience a temporary shortage of banking services as foreign banks scale back operations, potentially creating instability in financial service provision and dissatisfaction among clients. One way to mitigate this risk is to strengthen and consolidate existing EU-based banks, thereby ensuring a smoother transition into the CRD6 framework. The recent increase in merger activity may therefore reflect an effort to reinforce the reliability, scale, and efficiency of EU banking services across the Union.

An example of this trend is Banco Santander’s sale of its Polish operations to Erste Group Bank for €7 billion. The deal, announced in May 2025 and completed on January 9, 2026, resulted in Erste acquiring a 49% stake in Santander Bank Polska. The acquisition immediately gave Erste critical scale in Poland, increasing its Central and Eastern European loan portfolio from €94 billion to €131 billion and expanding its regional client base by approximately 50%.

As a stable and well-established Austrian institution, Erste can leverage its technologies, operational expertise, and financial resources to strengthen Santander Bank Polska. In the event that extraterritorial banks reduce or suspend operations in Poland due to CRD6-related barriers, Erste’s established presence would provide clients with a reliable EU-based alternative. This strategic value is reflected in analysts’ projections that the deal could increase earnings per share by more than 20% while raising return on tangible equity to approximately 19% by 2027. More broadly, Erste would become a larger EU-regulated banking platform operating across multiple member states, allowing it to support clients across sectors as they seek replacements for non-EU financial service providers.

As a result, further growth in European cross-border banking mergers is likely in the coming years. While these deals currently function as mechanisms for stabilizing the EU banking system and mitigating risks associated with client loss, they may ultimately evolve into instruments for establishing greater European banking independence on the global stage.

Overall, the rise in the value of cross-border EU bank mergers reflects the broader effort to build strong, multi-jurisdictional banking institutions ahead of the implementation of CRD6 and the potential reduction in non-EU banking activity within the Union. Merger activity is likely to continue increasing until CRD6 takes effect. Afterward, growth may stabilize as extraterritorial banks begin the process of securing local branch approvals. During that transition period, EU banks with operations across multiple member states will be positioned to capitalize on their geographic scale, expand their client bases, and further consolidate their role within the European financial system.