Banking union and the future of alternative banks: revival, stagnation or decline?

Banking union challenges the institutional mechanisms that alternative banks use to retain their status, goals, identity and carry out their operations. Yet the impact of banking union on them varies considerably and systematically: those alternative banks that held most closely to the traditional model fared best in the recent financial crises and have been impacted the least by banking union. In contrast, those banks that strayed from the traditional model and sought rapid expansion into new geographic or financial product markets fared much worse under the adverse conditions of recent years and, consequently, ended up under the full weight of banking union provisions. But even where alternative banks hewed to their traditional model and remain a significant part of national financial systems, we find that the crises and subsequent strengthening of the EU’s financial role have reduced the scope for national control over all banks, not just those directly supervised by the ECB.