Goldman Sachs Says EU Bank M&A Rationale Is Rising With Profits

The rationale for mergers and acquisitions among European banks is rising even in the face of hurdles to cross-border tie ups, according to one of the region’s top financials deal-makers.

“The last two years have been phenomenal in terms of how profitability has maintained at comparably high levels,” Dirk Lievens, who co-chairs financial institutions coverage for Europe at Goldman Sachs Group Inc., said in an interview. “The key fundamental question for everybody at this point in time is: We are generating the capital — how can we deploy it most productively?”

The European banking industry has seen a ...