AMSTERDAM, June 3 (Reuters) - There is "limited" logic for cross-border EU bank mergers as long as the bloc's banking union plan is incomplete, the chief executive of Dutch lender ING Groep, which has been reported to be interested in Germany's Commerzbank, said on Monday.
ING is the largest retail bank in the Benelux countries and the third largest behind Deutsche Bank and Commerzbank in Germany.
"The national competent authorities, in the absence of a banking union, will be very protective of capital in that country and liquidity in that country," ING's CEO Ralph Hamers told reporters on the sidelines of a conference.
Hamers declined to comment on any ING interest in Commerzbank, which last month ended merger talks With Deutsche Bank. In Germany, ING operates as a direct bank, ING-DiBa, with no physical offices.
Banking bosses have recently aired differing views on whether cross-border mergers are either desirable or achievable.
Last month UBS Chief Executive Sergio Ermotti said that consolidation in the European banking industry remains inevitable. UBS has been reported to be interested in a tie-up with Deutsche Bank following the failed Commerzbank deal.
Credit Suisse Chief Executive Tidjane Thiam told a newspaper on Sunday that mergers are not the best way to help deal with the problems presented by negative interest rates.
Hamers said mergers between banks in the same country or generating economies of scale could achieve cost savings as "cross-border consolidation doesn't help you to create capital efficiency nor liquidity efficiency" within Europe's existing regulatory regime.
ING has lowered operating costs in its home Benelux market at 4.4% annually over the past five years and has invested heavily in developing a mobile application and technology infrastructure that can be scaled easily across borders.
Hamers said ING had launched this year in the Philippines, after just 10 months of preparation.
Asked whether European banks were ready for any economic downturn, Hamers said that most, while relatively unprofitable, have improved their balance sheets since the financial crisis.
"If you look at how ready we are in terms of managing through a potential problem in terms of the available capital, most banks are," he said.
ING has moved from 26 billion euros of equity on a balance sheet of 1.3 trillion euros in 2008, to roughly 50 billion euros on a balance sheet of 900 billion euros, Hamers said.
It also has around 90 billion of capital that could be "bailed-in" in the event of a crisis.
"If you're not ready now, when will you be?" he said. (Reporting by Toby Sterling; Editing by Alexander Smith)