The European Commission has launched a consultation on how to improve the supervisory approval process for mergers and acquisitions in the banking, insurance and securities sectors.

Current EU rules allow its members’ supervisory authorities to block proposed M&A if they consider that the ‘sound and prudent management’ of the target company could be put at risk. In a 2005 commission survey the financial services industry identified inconsistent application of these rules as a potential barrier to cross-border consolidation in the EU financial sector.

As part of its ongoing review of this area, the commission is now asking the financial services industry how the clarity and transparency of these rules could be improved, and how best to ensure their consistent application across the EU. The responses will form the basis of a report to be issued in the summer, after which the commission may propose amendments to the existing EU legislation.

“Europe’s financial companies need to be able to compete globally, not just in their own back yard. Current rules on supervisory approval give too much scope for protectionism and divergent supervisory practices,” said EU Internal Market and Services commissioner Charlie McCreevy. “If we’re serious about making cross-border consolidation easier in the financial sector then we need to make sure that these rules are absolutely clear and transparent and consistently applied. And that they leave no room for political interference.”