PARIS, May 14 (Reuters) - The boss of the euro zone's most valuable lender BNP Paribas on Tuesday played down expectations for a revival of M&A activity in European banking, saying the economics of cross-border and even some domestic deals rarely made sense.

Jean-Laurent Bonnafe's comments to BNP's annual shareholder meeting comes after Spain's BBVA last week launched a hostile 12.2 billion euro ($13.20 billion) takeover bid for domestic peer Sabadell, and after French President Emmanuel Macron said on Monday that Europe needed more banking consolidation.

"If you're not a domestic player, you can't buy a player like Sabadell... There's no way that a non-Spanish bank could position itself as a white knight in a situation like this," Bonnafe said in response to a question about whether BNP would consider buying Sabadell.

Cross-border banking deals in Europe are rare. Hurdles include differing regulations and labour laws, the lack of a euro zone-wide deposit insurance scheme and politics.

"When you acquire a Texas bank and you're a Californian bank, if you have 100 cost synergies, and you do the same thing in Europe between two different countries, it's not 100 cost synergies that you're going to have, it's 33," Bonnafe said.

Euro zone regulators have long wanted more consolidation to boost financial stability and lenders, many of which have smaller market values than they did during the global financial crisis.

Macron, when asked on Monday by Bloomberg TV if he would be willing to countenance the sale of France's Societe Generale to Spain's Santander, said: "Dealing as Europeans means you need consolidation as Europeans."

Bonnafe said even domestic banking deals are tough to make work.

"You have to pay more than the price of the target; you have to buy it at a premium and when you're bigger, supervision means you need even more," he said.

Sergio Ermotti, CEO of Swiss bank UBS - which last year rescued rival Credit Suisse in the biggest banking deal since the global financial crisis - told a Reuters Newsmaker event this week that he wanted to see more deals but was not optimistic.

"It's going to be very hard to achieve a European consolidation without banking union and a proper framework, but domestic consolidation is still possible within Europe," Ermotti said. "There has to be a way over time to develop something that is not triggered by a crisis." ($1 = 0.9244 euros) (Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes and Susan Fenton)