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If European banks want to catch up with American and Chinese ones, they must push for consolidation to improve their return on capital and help them make the big investments in technology platforms and data analysis required to keep up with digitization. An ECB accounting change could help encouraging some of these new alliances.
the European Central Bank encouraged banks in July to recognise an accounting gain known as negative goodwill, or “badwill”, that they generate when they buy a rival below tangible book value, or at a lower price than the sum of its assets minus liabilities. This accounting technique enables banks to use badwill to offset restructuring charges—eg, from branch closures or lay-offs—though it cannot be used to pay dividends to shareholders, explains Stuart Graham of Autonomous, a financial-research firm.
https://www.economist.com/finance-and-economics/2020/09/10/why-are-european-banks-merging
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