Banking Union has revolutionised EU banking regulation and supervision by centralising decision-making processes and strengthening policy tools associated with specific policy aims – financial stability in particular. This post argues that in the absence of explicit hierarchy between policy objectives under EU law, symmetry within EU bank regulatory architecture is required. Implementation of other relevant EU policies – such as competition policy – should therefore be amended to mirror the new competences of EBU supervisors.

 Agnieszka Smoleńska and Maria Ana Barata

European University Institute | Florence School of Banking and Finance | Young Researchers Group – European Banking Institute

 

1. EUROPEAN BANKING UNION (EBU) BEYOND FINANCIAL STABILITY

In the aftermath of the crisis, financial stability has overshadowed other regulatory objectives such as protection of investors and creditors or – in the EU specific context – competition in the internal market. Under the EU Treaty framework, however, no specific hierarchy between policy objectives is foreseen. In fact, the current design of the regulatory architecture assumes that combined implementation of various policies, a mix of rules, incentives, business freedom, is required for an efficient, inventive and adaptable banking market that serves the real economy. The European Banking Union (EBU) centralises decision-making with respect to bank supervision and resolution only, without (or with few) specific arrangements for coordination with other policy objectives, such as competition or consumer protection enforced at both EU and national levels.[1] Such asymmetric centralisation distorts policy balancing process within the EU’s banking market regulatory architecture. An adjustment to implementation of other policy aims and tools by other EU and national authorities is required, in particular where the EBU authorities have in the aftermath of the crisis focused predominantly on the aim of pursuit of financial stability. In addition, good governance requires transparency and equity in the process of balancing various objectives, also by alleviating dangers of regulatory capture exasperated in a highly-concentrated market.

In this post we draw on recent examples of bank resolution in the EU to argue that symmetry in implementation of policies pursued under the EU regulatory architecture is necessary in the absence of explicit prioritisation of objectives under the EU Treaties. We consider the consequences of asymmetric policy implementation in the context of EBU on overall market functioning, including under-enforcement of competition policies in the context of transactions leading to increased concentration.

 

2. WHY SUPERVISORS WANT TO SEE MORE CONSOLIDATION IN THE BANKING SECTOR?

Banking market integration – also through consolidation – is considered to be one of the most efficient ways to reinforce EBU and to restore financial stability. A restructuring of the EU’s banking sector is already taking place and, according to ECB’s statistics, the number of credit institutions in the Eurozone has declined by 25% since 2008.[2] Such a decline can be partially explained by the exit from the sector of inefficient banks. From the supervisory perspective it is argued that cross-border concentration will lead to emergence of EU bank champions, also restoring those banks’ profitability.[3] Still, increasing concentration in the EU banking sector raises concerns from a competition policy perspective, with the growing market power of large market players entrenching the position of too-big-to-fail financial institutions,[4]  decreasing diversity of bank business models[5] and increasing concentration in the sector (at national levels).[6] EU competition regime – which like the SSM reparations responsibilities between national and EU levels – has not meanwhile been amended to mirror EBU oversight, leading to asymmetry in policy implementation.

 

3. EU COMPETITION POLICY IN THE BANKING SECTOR BEFORE AND DURING THE GREAT FINANCIAL CRISIS

EU Competition Policy

EU competition policy, as established by the EU Treaties, seeks to ensure that companies compete equally and fairly with each other to the benefit of the EU consumer. To this end, the European Commission (EC) enforces EU rules, with triple aim: to further European integration by establishing a level playing field; to promote market efficiency; and to increase consumer welfare.[7]

In the context of merger control, the institutional design repartitions responsibilities between the European Commission and the national competition authorities (NCAs)[8] on the basis of specific turnover and market share thresholds. Such repartitioning of responsibilities partially resembles the competences set-up under the SSM, however the EC does not enjoy the ultimate control over how these competences are shared, as is the case for the ECB under the Banking Union.[9]

 

EU Competition Policy in the banking sector

There was nothing in the Rome Treaty that – in theory – would have prevented the full application of articles 85 and 86 (currently articles 101 and 102 TFEU) to the EU banking sector. Nonetheless – in practice – the European Commission did not enforce competition in the banking sector before the early 1980s.[10] Only in 1981 the European Court of Justice (ECJ) ruled that competition rules were applicable in full to credit institutions rejecting the argument that banks were “entrusted with the operation of services of general economic interest” (and therefore were not subject to the Treaty rules on competition).[11] This ruling, which allowed for a number of substantive actions to be taken by the European Commission to ensure the level the playing field in EU financial and banking markets, was coupled with a period of significant liberalisation of financial activities.[12] After this liberalisation period, progressive harmonisation of EU banking law and the establishment of the single currency, facilitated cross-border banking activity in the EU. Even as at the time integration of financial supervision was still lagging behind,[13] EU competition policy was applied with full vigour, not only by prosecuting anticompetitive behaviours (such as cartels and abuse of dominant position), but also through state aid and merger control (the latter, only introduced in 1989). Since the current EC Merger Regulation was put in place, only between 1 January 2004 and 15 September 2008, the European Commission was notified in 103 cases for merger operations within the financial sector.[14] In the great majority of the cases (99 notifications), the European Commission cleared the operation without demanding any kind of remedy prior to the clearance.[15] Still, EU competition policy enforcement has been historically calibrated to the banking sector – a business activity which due to a combination of unique characteristics is particularly fragile and susceptible to instability.[16]

 

Financial stability and competition – why optimal implementation of policies requires coordination

Even before bank supervision was centralised at EU level, discussion on specific calibration of competition policy implementation took place in the context of the potential trade-off between financial stability (pursued inter alia via regulation) and competition (including merger control). This debate spans arguments which go both ways: increased concentration in the banking sector may improve financial stability by better aligning risk-taking incentives of borrowers (challenging the trade-off claim), or, in the alternative, more competition may cause instability in the banking sector, where low franchise value due to competitive pressures induces more risky behaviours by banks (supporting the trade-off claim).[17] Recent economic research nuances significantly the existence of a trade-off between the two policy objectives, by pointing to conditions on supply and demand sides of the banking markets as affecting the trade-off.[18] Vives emphasises that any trade-off may in any case can be minimised through institutional design, in particular where these policy objectives are pursued by distinct authorities.[19] Preconditions for such necessary coordination to ensure an optimal balancing of objectives include symmetric institutional set-up and toolbox.

 

4. COMPETITION POLICY FOLLOWING THE GFC AND AFTER THE BIRTH OF THE EBU – TENSIONS BETWEEN COMPETITION AND FINANCIAL REGULATION

The post-crisis decade brought about a reframing of the aims of financial regulation, and therefore also – at the institutional level – the terms of engagement between different financial regulators and competition authorities in the EU and Member States. More precisely, the EBU established a centralised (albeit in a dynamic way) mechanism for supervision of EU banks. The primary objectives of EBU are to ensure safety and soundness of financial institutions (via microprudential supervision), their resolvability and resilience (through EU resolution law) and the stability of the financial system as a whole (with macroprudential supervision).[20] EBU’s supervisors have also been (both explicitly and implicitly) empowered with competition policy-related competences such as prudential control over mergers and acquisitions in the banking sector and competences which affect the conditions of entry and/or exit for market participants or the level playing field in the sector.

Within the EBU, financial supervisors and resolution authorities (both national and European) are expected to take into consideration competition concerns, although they cannot enforce competition rules. Still, financial supervisory actions and, to some extent, resolution actions, have an impact on the structure of the EU banking sector, and therefore the terms of competition. Regulation can, for example, distort incentives or favour particular market players. This is acknowledged by the EBU framework and substantive EU microprudential law for banks – inter alia, by requiring that the conditions imposed on market players are proportionate.^[21]

The enforcement of competition policy remains predominantly with the competent competition authority (either the European Commission or NCAs).[22] However, the exact cooperation models of policy implementation within the EBU-context are still being ironed out, with calls for “new forms of engagement” already being made.[23] The structural evolution in the EU banking sector, which tends to more concentration after the GFC, raises the question of the new emerging risks in this regard, including entrenching too-big-to-fail positions, as well as raising entry barriers and stifling “good innovation”.

Source: European Commission, 2017

 

5. SYMMETRY BETWEEN COMPETITION AND FINANCIAL REGULATION UNDER THE EBU

The pursuit of safety and soundness of EU credit institutions through implementation of microprudential supervision (within the SSM), should not increase the risk of excessive market concentration in the EU banking sector. Such cause-effect reaction is especially relevant in a sector where market power is particularly important and barriers to entry are often prohibitively high to new market entrants.[24] A calibration of competition policy implementation by the European Commission in the banking sector could therefore be required for several reasons.

In particular, balancing the goals of competition and financial stability requires symmetry in enforcement of related policy tools, and therefore (still non-existent) symmetry between the content of applicable legislation. EU competition policy control is only partially inbuilt into the EBU bank supervision and resolution procedures, typically when the provision of state aid is at stake. The remaining antitrust regime – especially merger control – is not specifically covered by the post-crisis supervisory and resolution EU framework. We find lack of convergence along two further dimensions: firstly, the level (national or European-wide) of policy implementation and, secondly, the timing of policy enforcement. Extreme cases of bank failures in particular show problems in effecting coherent policy implementation which may arise because of such asymmetry.

 

Level of policy implementation

Within the EBU, some tasks were centralised while others were left to the Member States. Consequently, some supervisory and resolution actions are taken at EU level whereas others have exclusively a national dimension. The same happens with competition policy, however not in a way symmetric to EBU.

Failure of an EU bank can trigger a resolution procedure or start a liquidation process. The choice between one path or the other is perceived as a supervisory concern and within EBU decided by the Single Supervisory Board. Such cases may have a Community dimension in merger terms for example where sale of business (of a failing bank) is the chosen resolution tool, the search for a private buyer (for the business) may lead to a banking merger with a community dimension.[25] This being the case, the European Commission will assess the banking merger from a competition perspective (as in the case Banco Santander/ Banco Popular Español S.A (BPE) merger discussed below). However, no specific competences are conferred on the European Commission when the failing entity is liquidated and sold in accordance with national law – even when it is the ECB (EU-level) declaring the bank as failing or likely to fail.[26] This means that, the trigger for bank resolution or insolvency at EU-level does not necessarily trigger an EU-wide competitive assessment of any subsequent actions.[27] To converge competition and financial stability (“resolution”) policy implementations, it is necessary therefore, to reconsider the criteria for community dimension in bank merger control within the EBU, especially when such transactions are triggered by EBU-level decisions.

 

Timing of policy implementation

The second dimension where the lack of symmetry in policy implementation is evident, concerns the asymmetries between authorities in concurrent procedures. In particular, in a crisis context lack of adjustment of competition policy enforcement could reduce its implementation to a ‘fig-leaf’ exercise and therefore lead to policy under-enforcement. An example of a failing bank being resolved through a private sector measure (such as sale of business) is illustrative of this point, a pioneering example being the takeover of Spanish BPE by Banco Santander in 2017.

In the beginning of June 2017, the liquidity situation of BPE rapidly deteriorated, and on 6 June 2017 the bank was declared failing or likely to fail by the ECB. EU resolution law foresees three alternatives in such cases: (a) a private sector measure; (b) normal insolvency of the bank; or (c) intervention through resolution by authorities. In the case of BPE, a (private) buyer was found (Banco Santander). Under the resolution scheme adopted by SRM transfer of the failing bank to Banco Santander for EUR 1, inclusive of BPE’s liabilities, was agreed.

The acquisition fell within the scope of EC Merger Regulation given the market share/turnover of the banks concerned, thereby requiring that both resolution and competition policies were applied by relevant EU authorities. In the light of the urgency of the transaction to ensure the continuity of the critical functions performed by BPE, in a decision dated 6 June 2017, the European Commission allowed the merger to go ahead before its final approval. Only a preliminary market assessment was performed by the European Commission (through the DG COMP) at that stage, which considered that the market share of the joint new entity would be below 20-30% in the market for credits, consumer funds or in terms of number of branches, and close to 20-30% in in SMEs lending.

The derogation was conditional on Banco Santander submitting a complete notification of the transaction. The acquiring bank was required to take only actions that were necessary to restore BPE’s viability and to ring-fence BPE’s business until the final decision by the European Commission was taken. The acquisition was approved under EU merger rules on 8 August 2017 without objections. The European Commission’s investigation concluded that the transaction did not raise competition concerns, as the parties’ combined market shares would generally remain limited (below 25%) and strong competitors would remain in all affected markets.[28] The transaction was therefore cleared unconditionally. Pursuant to the transaction, Banco Santander holds the biggest market share in Spain for SME (25%), loans (19.5%), and customer funds (18.8%).

In this case although merger control was formally exercised, the crisis (“financial stability”) imperative precluded a full assessment of the transaction before its completion. Consequently, BPE/Santander merger similarly raises the question of whether situations where a resolution procedure is triggered do not require an adjustment of the merger control policy in the banking sector, in order to ensure symmetry of policy implementation.

 

A tailor-made approach of competition policy under the EBU

With the creation of the EBU, EU competition policy tools should be adjusted to the banking sector. In the alternative, an exclusive focus on the safety and soundness of the banking sector may lead to under-enforcement of competition policy, in violation of EU Treaties. Such under-enfrocement may lead to higher risk of moral hazard, lower quality inefficiencies, decrease consumers’ choice or facilitate abuse of dominant positions. The potential anti-competitive consequences of resolution, as may be the case of BPE/Santander merger, require a tailored-made and dynamic merger control policy, to ensure symmetry in policy implementation.

For example, where the European Commission may clear most of the notified banking mergers, a specific set of procedures and commitments could facilitate the safeguarding of a level playing field in the sector by applying a bank-specific competitive assessment. Such commitments may include geographic constraints of specific financial activities in some of the potential affected markets: retail banking,[29] corporate banking, investment banking, leasing, factoring, payment cards, financial market services or asset management. They can also include temporal constraints, to avoid medium or long-term competition distortions in a specific national banking sector, e.g. commitment to divest one specific branch in a 5-years-period since the regulatory clearance. A further possible calibration of competition policy to improve policy symmetry could be targeted implementation of other competition policy tools, such as market studies, in the context of bank resolution and recovery cases.[30]

 

6. TRANSITION FROM CRISIS TO ‘STEADY-STATE’ POLICY IMPLEMENTATION

As a result of the deep economic impact of the GFC, regulatory reform in the EU reframed both substantive rules and institutional arrangements for the oversight of the banking sector. The complex post-crisis architecture of financial oversight with numerous new authorities as well as new regulatory objectives raises concerns from the perspective of bank market functioning in the long-term, given its high barriers to entry and differentiated impact of regulation. The challenges of ensuring contestability of financial markets as well as a level playing field are concerns from a competition point of view also in areas such as FinTech and consumer protection, in addition to traditional competition policy enforcement.

Scope for negative externalities/external social costs of bank failures (partially) justifies the need for a specific insolvency regime for failing banks, i.e. resolution.^[31] If the new EU resolution framework accepts that for financial stability concerns, insolvency proceedings cannot be started, some banks will not be allowed to fail (again). Hence, the post-crisis regulatory EU regime will put under resolution those banks whose failure could affect the EU financial system. In other words, the new EU resolution regime will continue to favour the safeguarding of financial stability over banking competition concerns.[32] At the same time, increased market concentration – with the potential emergence of EU bank champions – is perceived as stabilising by supervisors. While such an approach undoubtedly can be justified from a prudential perspective, to ensure a socially optimal balance between various policy objectives EU, a calibration of EU competition policy in the banking sector is required, also to prevent under-enforcement. Lack of convergence and symmetry between competition and supervision/resolution procedures is particularly noticeable in extreme cases of bank failures, where policy implementation determines a hierarchy of objectives in practical terms, even where no such hierarchy exists under the EU Treaties.

That a healthy and growing economy depends on a competitive and efficient banking market is an important lesson learnt from the financial crisis.[33] EU Treaties foresee a combined policy implementation with that aim in mind. The expected outcome of competition policy enforcement is dynamic efficiency in the financial sector, optimising long-term performance and behaviour of market players, whereas the expected outcome of financial supervision and regulation is the focus on the current state of supervised entities (rather than on longer term processes) and the safeguarding of financial stability. Even where competition and financial regulation policies may pursue different intermediate goals, their enforcement should be carried out – also in institutional terms – in a way which ensures financial and banking markets are robust in the long-term, that is in a symmetric and coherent mannet. Lack of specific rules which provide for symmetry and convergence in implementation of various policies under EBU undermines and obscures the process of balancing of these aims. Such lack of transparency further precludes accountability of relevant actors in the long-term.

In the context of the EBU in particular, there are plenty of arguments to support a tailor-made – yet proactive – competition policy implementation by the European Commission in the banking sector which is becoming increasingly concentrated, even as financial stability concerns remain paramount. In addition to specific amendments suggested above, this requires a shift of thinking in implementing EU competition policy as a crisis management and fire-fighting tool, to employing it in a forward-looking dynamic manner.

 

Note: This contribution was prepared in the context of 5th Financial Stability Conference, which took place in Berlin on 18 October 2017. See: http://financial-stability.org/research/.

 

[1] The exception here is state aid control, where in the case of bank resolution a specific state aid framework and procedure is set down by Article 18(4) of SRM Regulation (Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014). With respect to other areas of competition policy, the EBU legal framework states that the ECB is to carry out its tasks subject to and in compliance with relevant EU law, including competition law – Recital 32 of SSM Regulation (Council Regulation (EU) No 1024/2013 of 15 October 2013).

[2] ECB, “Report on Financial Structures”, 2017, p.23.

[3] See especially ECB, “Special feature: Cross-border bank consolidation in the euro area” in Financial Integration in Europe Report, 2017, p. 41. For studies arguing there number of banks in the EU is inefficient see ESRB, “Is Europe overbanked? 2014.

[4] That is quite opposite of “making banks safe to fail” as the post crisis regime claims to do, see: Thomas F. Huertas, “Safe to Fail: How Resolution Will Revolutionise Banking” (London: Palgrave Macmillan, 2014).

[5] Where diversification is considered one of the risk-mitigating strategies, decrease of diversity can lead to more herding. Some argue, however, that less diversity of banking models makes the system more manageable from a supervisory perspective (reduction of complexity associated with diversity), and this therefore reduces financial instability (see A. Haldane, n. 2, p. 26).

[6] Measured by various indicators such as market share of the largest 3 or 5 market actors (e.g. see European Commission, “Coping with the international financial crisis at the national level in a European context Impact and financial sector policy responses in 2008 – 2015”, Report, 2017) as well as dynamic competition measurements such as the Boone indicator (see World Bank Group, “The Little Data Book on Financial Development 15/16, 2015).

[7] Competition Policy in the EU. Fifty Years on from the Treaty of Rome., ed. by Xavier Vives (Oxford, United Kingdom: Oxford University Press, 2009), p. 1.

[8] The EC Merger Regulation applies to all concentrations with a Community dimension as defined in Article 1 (Scope) of the Regulation.

[9] A concentration has a community dimension when, inter alia, the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5 000 million; or the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State. In the banking sector, the calculation of turnover is adjusted to banks (Article 5(3) of the EC Merger Regulation) and there is a special rule about the temporary holding of company assets by a financial institution for resale (Article 3(5) of the EC Merger Regulation).

[10] Elena Carletti and Phillip Hartmann, ‘Competition and Stability: What’s Special about Banking?’, in Monetary History, Exchange Rates and Financial Markets: Essays in Honour of Charles Goodhart, P. Mizen, Cheltenham: Edward Elgar., 2002, ii.

[11] Paragraph 7 of the Case 172/80 – Gerhard Züchner v. Bayerische Vereinsbank AG, 1981. For more details, see, for example: Ignazio Angeloni and Niall Lenihan, ‘Competition and State Aid Rules in the Time of Banking Union’, in: “Financial Regulation: A Transatlantic Perspective” (E. Faia et al (eds)., (Cambridge: CUP, 2015).

[12] See, for example, P. G. Teixeira, “Europeanising prudential banking supervision. Legal foundations and implications for European integration”, in: Fossum, John Erik, and Agustin Jose Menendez. ‘The European Union in Crises or the European Union as Crises?’ ARENA Report, 2014.

[13] For arguments explaining the division between monetary policy and banking supervision see: Tomasso Padoa-Schioppa, “Regulating Finance: balancing freedom and risk”, (Oxford: OUP, 2004). For arguments on centralization of bank supervision in the EU see: Despina Chatzimanoli, “Law and Governance in the Institutional Organisation of EU Financial Services: The Lamfalussy Procedure and the Single Supervisor Revisited”, PhD Thesis, European University Institute, 2008.

[14] Data used in accordance with data available on the EC database.

[15] Only in one case – Case M.4844, Fortis/ABN Amro – the European Commission imposed conditions to the merging entities before clearing the operation (which happened on 3 October 2007).

[16] Competition and Financial Markets, Volume 1, Policy Roundtables (OECD. Directorate for Financial and Enterprise Affairs. Competition Committee., 8 June 2009), p. 102., Mathias Dewatripoint, ‘European Banking: Bailout, Bail-in and State Aid Control’, International Journal of Industrial Organization, 34.C, 37–43 (p. 41)., and Stan Maes and Stephen Mavroghenis, ‘Aid in the Banking Sector’, in EU State Aid Control: Law and Economics, ed. by Phillipp Werner and Vincent Verouden (Alphen aan den Rijn: Kluwer Law International, 2017), pp. 759–820 (p. 759).

[17] For an overview about the interplay between short-run stability and long-run healthy competition, see Carol Ann Northcott, ‘Competition in Banking: A Review of the Literature’, Bank of Canada Working Paper, 2004–24 (2004).

[18] John H. Boyd and Gianni De Nicolo. ‘The Theory of Bank Risk Taking and Competition Revisited’. The Journal of Finance 60, no. 3 (2005): 1329–1343.

[19] Xavier Vives, “Competition and Stability in Banking: The Role of Regulation and Competition Policy” (Princeton: Princeton University Press, 2016).

[20] Macroprudential supervision did not exist in the EU before the Great Financial Crisis. When designing the post-crisis reform, EU policymakers realised that the stability of the whole financial system deserved a proper oversight, not exclusively focused on the performance of specific financial institutions.

[21] BIS, “Proportionality in banking regulation: a cross-country comparison”, August 2017.

[22] Although in some Member States merger decisions of the competition authority can be overturned by the executive where they conflict with the assessment of the supervisor (e.g. Netherlands). See X. Vives, n. 34, p. 151 – Reference incomplete

[23] Ignacio Angeloni, “Bank Competition and Bank Supervision”, 2016, https://www.bankingsupervision.europa.eu/press/speeches/date/2016/html/se160704.en.html.

[24] OECD, “10 years on from the Financial Crisis: Co-operation between Competition Agencies and Regulators in the Financial Sector”, 2017.

[25] If the banking merger has no community dimension, the assessment will be carried out by a NCA.

[26] See e.g. SRB Notice summarising the effects of the decision taken in respect of Banca Popolare di Vincenza S.p.A., 23 June 2017 upon ECB decision that the Bank is failing/likely to fail (available at: https://srb.europa.eu/en/node/341), the national competition authority decision: Autorita Garante della Concorrenza e del Mercato, Provvedimento C12103 Intesa San Paolo/ Rami di Azienda di Banca Popolare Vincenza-Veneto Banca, 5 July 2017, available at: http://www.agcm.it/concorrenza/concentrazioni/open/41256297003874BD/4C62AB34C5F3A984C1258159003C57A6.htm.

[27] The thresholds for “centralization” of the decision-making within the SSM are much higher than in the case of competition policy, i.e. a bank is deemed ‘significant’ when the total value of its assets exceeds EUR 30 bn or the ratio (Article 6 of SSM Regulation). While this threshold is higher than in the case of merger policy as a rule, the ECB enjoys residual power over the financial system as a whole. Furthermore, in a number of cases, e.g. declaration of failing or likely to fail or authorization procedures, the ECB enjoys responsibility for all credit institutions established on the territory of the EBU (Article of 4 SSM Regulation).

[28] European Commission, 2017, “Mergers: Commission approves acquisition of Banco Popular Español S.A. by Banco Santander”, http://europa.eu/rapid/press-release_IP-17-2421_en.htm; full.

[29] For an overview of what is the understanding of the European Commission on retail banking, see M.4844 – Fortis/ABN AMRO Assets; and M.5948 – Banco Santander/Rainbow; M.3894, Unicredito/HVB.

[30] The enforcement of new areas relevant to competition policy, such as data protection and data sharing rules, might prove particularly relevant in this regard.

[31] Richard S. Grossman, ‘Banking Crises’, Oxford Business Law Blog, 2016.

[32] David Howarth and Lucia Quaglia, The Political Economy of European Banking Union (Oxford University Press, 2016), p. 115.

[33] Danièle Nouy, ‘“A Penny for Your Thoughts – What”s on the Mind of a Supervisor?”, Speech by the Chair of the Supervisory Board of the ECB’, 2017.: “The easy answer is this: some banks will take action; they will adapt to the challenges, they will survive and prosper. Other banks won’t.”