Published by Global Banking & Finance Review®
Posted on April 11, 2025
2 min readLast updated: January 24, 2026
Add as preferred source on GoogleThe ECB opposes BNP Paribas' favorable capital treatment for its AXA deal, affecting European financial consolidation.
PARIS (Reuters) -The European Central Bank is opposed to BNP Paribas using a favourable capital treatment for its deal to buy French insurer AXA's asset management business, a person with knowledge of the matter said.
The ECB's view could have negative implications for consolidation across Europe's financial industry, making certain deals more expensive.
BNP shares fell on Friday and were last down 2.4%, underperforming the wider European banking sector, which dropped about 0.2%.
BNP Paribas and AXA declined to comment.
The ECB declined to comment.
The French bank had asked the ECB to use what is known as the "Danish Compromise" that provides favourable capital treatment in asset management takeovers carried out through banks' insurance businesses.
In a media interview published on the ECB website on Friday, Claudia Buch, the ECB's chief supervisor, said the bank's interpretation of the "Danish Compromise" "is that it’s intended to be applied to the insurance sector and not to, for example, asset management undertakings."
She also noted that the ECB did not make the rules, which was the role of European legislators and the European Banking Authority.
The Danish Compromise makes an asset management acquisition cheaper for the buyer in terms of the hit to its regulatory capital. It lets banks risk-weight their insurance investments instead of deducting them in full from their capital.
BNP Paribas's AXA deal was agreed last year but is yet to be finalised.
The ECB has said previously it would decide on the use of the Danish Compromise on a case-by-case basis.
Last month, the ECB took a negative stance on Italian bank Banco BPM benefiting from the same rule for its acquisition of a local asset manager.
BPM has since said it will continue with its bid for Anima Holding.
Banking executives are keen to see what stance the ECB takes, with industry sources saying a positive opinion on the use of the Danish Compromise would support further dealmaking.
(Reporting by Florence Loeve, Chandni Shah and Tommy Reggiori Wilkes. Editing by Jane Merriman)
The ECB's opposition to BNP Paribas' favorable capital treatment for its AXA deal.
It could make financial consolidations more expensive and impact future banking deals.
A rule allowing banks to risk-weight insurance investments, intended for the insurance sector.
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