The euro was designed to create economies of scale. A single European currency zone was expected to maximize the reach of companies looking to exploit the new supermarket by rationalizing planning and production costs. Proof of the idea's appeal -- and its inevitability -- is the wave of mergers and acquisitions that is rumbling across the continent. From Scandinavia to the Mediterranean, bigger is looking better -- with profound consequences for traditional ways of doing business in "the Old World."
No industry is immune from the euro's impact, but the results are most visible in the finance sector. Earlier this week, Den Norske Bank, Norway's largest bank, announced that it would buy Postbanken, a state-owned finance institution, in a move driven by the need to consolidate to compete. That deal follows two developments last weekend that will transform the landscape of Italy's banking sector.
In two separate deals, San Paolo-IMI, currently the country's largest banking group, said that it would buy Banca di Roma to create a $32 billion financial conglomerate. Almost simultaneously, UniCredito Italiano, Italy's third-largest bank, offered to combine with Banca Commerciale Italiano (Comit), in a move that would yield Italy's largest bank -- and a real European player -- with assets of $277 billion. Officials at both banks consider their offers to be a "friendly bid," and analysts expect the deals to go through, although the Comit tieup promises to be a bit stickier.