Money Worries

The bidding war for Dutch bank ABN-Amro has sent shock waves through ... Germany. Europe's biggest economy, in full recovery thanks to the dynamism of its world-class manufacturing groups, is being held back by the absence of global-scale banks and politicians and analysts suspect that one or more could soon be the prey of a hostile takeover.

Earlier this month, shares in Commerzbank, worth around €24bn, briefly flared on trader rumours that Citigroup, the US giant, was about to swoop - a rumour immediately scotched by the alleged predator. Allianz, the insurer that owns Dresdner Bank and is worth some €73bn, is now reportedly considering a merger with another bank or spinning off Dresdner.

Jochen Sanio, head of financial market regulator Bafin, has also suggested that German banks could be the targets of hostile bids because of their passive role in European consolidation which has seen Italian banks club together to ward off "foreign" (European) predators, with Unicredito - which took over Bavaria's Hypovereinsbank - snap up Capitalia. All this has set alarm bells ringing in Berlin and Frankfurt.

It's the fate of Deutsche Bank that grabs the attention. It would like to expand its domestic presence by taking over several or more of the publicly owned and jealously guarded savings banks but, under its Swiss chief executive, Josef Ackermann, has put most of its eggs into the City-based investment banking division to reach his 25% pre-tax profits margin. Once the world's biggest bank, after its purchase of Bankers' Trust, it now ranks 23rd.

Wolfgang Kaden, ex-Spiegel editor, has written a devastating critique of Germany's "deep and absurd provincialism" and inability to make its banks fit for globalisation - exacerbated by the political class's resistance to takeovers. Banks that once controlled the big industrial groups through their cross-holdings are now being shoved aside by the private equity boys and the big US houses. If the eight state-owned Landesbanken were to merge, Kaden says, they would leap into the world league with assets of €1.3 trillion.

The Germans are anxiously eyeing developments across the Rhine in France where Daniel Bouton, Société Générale's chairman, has reportedly asked advisers to study a bid for BNP Paribas to create a €145bn group. That prompted a glacially ironic riposte from Michel Pébereau, BNP's chairman: "Our head of communications tried to play rugby with a tennis racket and the outcome was not convincing." BNP sponsors Roland Garros - and SocGen the rugby world cup.

Sum of the parts

An arcane dispute, accompanied by the usual ferocious corporate lobbying war and a political logjam, is holding up a piece of EU legislation that could save 260 million European car-owners hundreds, nay thousands of euros by opening up the €12bn market of visible vehicle spare parts - bumpers, windscreens, bonnets and lamps - to full competition. It's been going on for 33 months though its origins go as far back as 1993.

In some parts of the EU - France, Scandinavia, Austria and most of eastern Europe - consumers are forced to go to recognised dealers and not the independent aftermarket to buy replacement parts after, say, a crash. According to BEUC, the pan-European consumer group, it costs the average driver 150% of the original buying price to service and repair a car over ten years. But Nuria Rodriguez, its legal officer, said that "captive consumers" in monopoly markets can pay between 40 and 200% more for parts, adding even more to those charges.

ECAR, the European campaign for the freedom of the automotive parts and repair market (sic) chaired by Louis Shakinovsky, an automotive glass entrepreneur, has now launched a campaign to break the logjam - caused by France and Germany, home to Europe's biggest car-makers. It is lobbying governments and MEPs to adopt the European commission's proposal for a "repair clause" to a 1998 directive giving design protection to the car groups. Shakinovsky said these groups, in resisting the clause, were demanding a monopoly: "All their dreams would come true if they could close the competition down."

Eric Nooteboom, the senior commission official in charge of the dossier, is not that confident that a compromise can be found and is worried that a "fake" one may be struck allowing "design protection" to be retained for, say five years or national governments, in a classic Brussels fudge, to vary the timing of its removal. Shakinovsky says: "These are not compromises to the extent that you can't be a little bit pregnant."

But Monica Frassoni, co-leader of Green MEPs, insists there is now a parliamentary majority to unblock the logjam, with the legal affairs committee due soon to lead the way. "This is a litmus test of how serious we want to be about the internal market ... Protecting certain lucrative brands, especially those of car-makers which are fighting against controls on emissions, does not help consumers - or the environment."

Salami tactics

EU trade commissioner Peter Mandelson believes he made a breakthrough in talks on prising open China's markets with his opposite number, Bo Xilai, this week. As if to prove his point, the Italian association of meat producers Assicadisclosed that it had finally broken into China, with the first 36 firms allowed to export raw hams (prosciutto crudo). It only took four years and intense pressure and several missions to Beijing from the Italian government to do so.

The €8bn industry, assailed by health fascists, claims to be turning the corner after four years of stagnation, with exports up 7% (Britain is its fourth-largest market) and output back to 2003 growth levels. According to Francesco Pizzagalli, the trade body's president, it has done so by measures such as reducing the cholesterol levels in pigs and being bound to strict health and quality controls. But it balks at compulsory labelling of its products to indicate the origins and contents of the raw materials. A voluntary agreement is on offer, says Pizzagalli, who wants the EU to set stricter standards.