On the face of it, European banks look ripe for M&A. According to the European Banking Federation, there are some 4,769 credit institutions in the Eurozone. And with so much competition in such a fragmented market, it is very difficult to be profitable. The average return on equity for Eurozone banks is just 5.6%, compared with a cost of equity estimated at above 10%.

So consolidation looks like a no-brainer. It would cut costs, create economies of scale and provide opportunities for diversification, bringing higher profits in the process.

Regulators have been talking up the prospects for mergers for a long time and consolidation is all but inevitable at some point. But anyone hoping for a surge in activity any time soon will be disappointed.

One reason for the lack of action is that Europe’s banks are still rebuilding from the global financial crisis. Progress at a region-wide level is happening - the European Banking Authority’s latest stress test results showed this. But it is slow and banks are going to want to avoid big M&A before they’ve achieved significant improvements in profits and dividends.

Big mergers would make that more difficult. When a bank becomes systemically important - as the product of any major cross-border merger would - it has to hold more capital and attracts greater regulatory scrutiny, making it harder for acquisitions to deliver uplifts in shareholder returns.

These concerns are particularly keen as we enter 2019 because the banks are going to have to hold yet more capital through the Capital Requirements Regulation. This will be fully phased in from 1 January 2019, and all banks in the European Union will need to comply.

Another reason is that banking mergers are just very hard to get right. The RBS/ABN AMRO debacle of a decade ago is a cursory example and will no doubt still provide a word of caution to ambitious CEOs.

Given today’s lighter-touch, data-driven relationships between banks and their clients, consolidation is arguably a higher-risk process than it used to be. The execution risks are substantial, with the integration of IT systems a crucial part of any banking merger. As we saw with Sabadell’s acquisition of TSB, it is all too easy to get this wrong. These risks are particularly acute with cross-border mergers, creating a further major impediment to M&A.

The great unfinished edifice of the EU Banking Union project is another impediment. There has been some harmonisation of rules but there are still big differences between countries in important areas like tax and bankruptcy law. This makes any major cross-border M&A much more difficult to achieve.

The fact that it is not obvious when the banking union project might actually be completed does not help. Italy’s new populist government and the start of Germany’s quest to replace Mrs Merkel both make progress soon unlikely.

Set against all these obstacles is the fact that shareholders need to see returns improve. That should happen as balance sheets continue to be repaired and banks have to deal with less new regulation.

Getting banks in better shape should grease the wheels of consolidation. But the journey has been long and there remains a good way to go. Consolidation will happen and should happen. Just not next year.