Business Model Sustainability in Bank Mergers and Acquisitions (M&A): a Regulatory Takeover?

In April 2024, the Basel Committee on Banking Supervision introduced the concept of "business model sustainability" in the revised Core Principles for Effective Banking Supervision. The concept allocates an "ultimate responsibility" to the board of directors of (global) banking institutions for the design and implementation of "sustainable business strategies". Meanwhile, the concept has been put to the test by the residents of Europe's banking landscape, specifically in the context of Mergers and Acquisitions (M&A). The article reckons the concept of business model sustainability in light of topical consolidation attempts in European banking. The article advocates a consistent, predictable and nondiscretionary approach towards the board of directors in strategic decision-making on M&A transactions, especially in relation to (external) banking supervisory authorities. This ought to contribute to the aspired advancement of European capital markets and banks.

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