This paper investigates the characteristics of the market for corporate control in German banking. I compare two sets of institutions: takeover approval versus (constructed) ownership concentration. I highlight the overall insulation of large German commercial banks from unwanted takeover bids despite an institutional framework not specifically designed to protect them, i.e. independent regulatory authorities empowered to protect the rights of minority shareholders. Instead, the relative insulation of German commercial banks from unsolicited takeover bids reflects intra-network coordination whereby friendly mergers have occurred among companies with a long-term relationship in the form of interlocking directorates. This outcome suggests the importance of encompassing banking supervision, i.e. regulation taking place across the different spheres of the economy. The paper concludes by investigating whether supranational or domestic regulation of takeovers is better suited to deal with the shortcomings associated with overall insulation against unsolicited takeover bids.
