MADRID (Reuters) – EU leaders’ agreement on massive stimulus package for their coronavirus-hit economies should help kickstart cross-border consolidation in Europe and complete European banking union, Santander SAN.MC said President Ana Botin.

“What was agreed yesterday (in the early hours of Tuesday) means that the opportunity and likelihood of us getting a banking union and cross-border consolidation is much higher,” Botin told Reuters on a Zoom call.

“It will require changes, but I think these changes are much more likely today than they were yesterday,” said Ana Botin.

Santander is the second lender in the euro zone in terms of market value.

Botin’s remarks echo comments from European Central Bank Vice President Luis de Guindos, who said on Monday he expected banks to embark on national and cross-border consolidation within the next few months. weeks or months.

Consolidation is seen as inevitable among eurozone banks to gain momentum, but low valuations and different legal frameworks between countries hamper such transactions.

The profitability of the entire euro area banking sector is weak and an economic recession in the region is expected to further cloud the outlook for banks, in part also due to the higher loan loss provisions linked to the impact of the financial crisis. COVID-19 epidemic.

“What happened yesterday on the agreement in Europe is a clear springboard for banking union in Europe. And banking union and the free transfer of euros between countries is a prerequisite for cross-border mergers and consolidations in euros, ”Botin said.

“I think now is the time. I think European banks need scale, ”Botin said, adding that Santander was not interested in participating at the moment.

“As of today, no, with the current rules, no. When the rules change, who knows. Even then, I think there are others who are more likely to be ahead of us.” , she said.

The deal between EU leaders paved the way for the European Commission to raise billions of euros in capital markets on behalf of the 27 states, an act of solidarity unprecedented in nearly seven decades of integration European.

“This is really important for Europe, I think it is a game changer, it is really a turning point in the right direction,” Botin said, adding that this “will be seen in time as a key step in the construction. from Europe. “

Botin also indicated that the deal diminished and avoided the risks of sovereign risk and a fragmentation issue in Europe and that the person, the country, that took the initiative to make this possible was (the Chancellor Angela) Merkel and Germany.

“We could have hoped for something bigger but not something better,” she said.