France: Fewer Banks Could Harm Competition

AOIFE WHITE

BRUSSELS (AP) — France's finance minister warned Monday that a wave of banking mergers and collapses around the world could give the few still standing too much control over the market.

Christine Lagarde told reporters the very small number of major banks — including those "on steroids, relying on public money" — could become oligopolies with the potential to abuse their market power to fix prices or squeeze out rivals.

"Look at investment banks in the United States where, before the crisis, there were about six. Today there are about three," she said. "I believe that all that doesn't happen without some effect on competition and abusive behavior."

She said she had asked a global financial oversight advisory group to the Group of 20 rich and emerging nations to look at competition problems among banks worldwide that might be "in the process of forming oligopolies for certain products in certain markets."

She also asked the Financial Stability Board to look at how competition between banks is affected by bankers' pay regulation. French banks, under government pressure, have curbed pay rewards. Some fear this could encourage talented staff to move elsewhere to earn more.