The head of the European Central Bank’s Single Supervisory Mechanism (SSM), Andrea Enria, expressed his disapproval of the concept of national champions in the banking sector – a concept that underpins the planned merger between Commerzbank and Deutsche Bank.

“I do not particularly like the idea of national champions…of a European champion,” he told the Financial Times. Enria also made clear that any merger will gain approval based on the merits of the business proposition.

Markets are not convinced that the merger, which would create the third-biggest lender in Europe, would create a more resilient bank.  However, as the German government owns 15% of Commerzbank, a merger would allow the state to influence risk-decisions, which, given the long history of litigations, may offer some reassurances for Deutsche Bank’s investors. This new reality may not, however, create bigger risks for the taxpayer.

Enria’s objective is to prepare the Eurozone’s banking system to move away from the model of potential bailouts by the taxpayer to bail-ins in which investors assume the risk of a meltdown. Germany has championed this model. In that context, there is a need for further transparency in the decision-making process of mergers, as well as investment strategies.

Enria echoed the call for an end in the so-called “doom-loop” – the tendency of the national banks to be exposed to sovereign bonds of the host country. He also revealed that he expects €1.2 trillion in assets to be moved from the UK to the Eurozone by the seven biggest lenders in Europe as a result of Brexit, which will bring them under the regulatory jurisdiction of the SSM. He points out that decoupling sovereign risk from the banking risk is not consistent with the logic of a “national champion”