To boost Italian banks’ profits and allow them to comply with capital requirements imposed by regulators, Bank of Italy’s Governor Ignazio Visco said on April 16 that mergers and cuts are “essential”.

As reported by the Reuter’s news agency, Italy’s fragmented banking industry is seen heading towards a new round of consolidation next year as banks struggle to shoulder soaring compliance and technology costs, and as they face rising competition from non-banking rivals.

“More adequate corporate structures, higher levels of efficiency and productivity, the search for tie-ups and mergers… are essential to generate adequate profits and reach required capital thresholds,” Visco said in a speech.