Death in Veneto? European Banking Union and the Structural Power of Large Banks

24 Pages Posted: 15 Jan 2019

See all articles by Pepper D. Culpepper

Pepper D. Culpepper

University of Oxford - Blavatnik School of Government

Tobias Tesche

Single Resolution Board

Date Written: January 2019

Abstract

We argue that the evolving preferences and power resources of large cross-border banks help explain the crucial political moves to European banking union. As they became larger and more European, the relative dependence of these banks on national regulators declined even as the dependence of states on these banks increased – resulting in a net rise in the structural power of large banks. These banks benefited from the supranationalization of supervision through reduced compliance costs and the effective opening of European markets. The political divergence in the interests of large international banks and small national ones eventually caused the German and the French governments’ change of position in intergovernmental bargaining. Once in place, banking union accelerated balance sheet consolidation to the benefit of large banks that took over their weaker competitors.

Keywords: Banking supervision, banking union, European integration, European Union, Eurozone

Suggested Citation

Culpepper, Pepper D. and Tesche, Tobias, Death in Veneto? European Banking Union and the Structural Power of Large Banks (January 2019). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2019/04, Available at SSRN: https://ssrn.com/abstract=3315999 or http://dx.doi.org/10.2139/ssrn.3315999

Pepper D. Culpepper (Contact Author)

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

Tobias Tesche

Single Resolution Board

Brussels

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