Law and governance of EU cross-border bank groups after the Great Financial Crisis

Abstract

The monograph explores the new crisis prevention and risk management regime for EU cross-border bank groups established after the Great Financial Crisis (GFC). The absence of a such a framework over the course of GFC resulted in renationalisation and fragmentation in the internal banking market. Though the new EU resolution law now regulates cross-border bank groups specifically, it does not explicitly lay down their organisational law. The thesis reconstructs the principles of cross-border bank group governance drawing on common legal traditions of EU Member States, corporate group theory and European Commission’s state aid control of bailouts to cross-border bank groups during the crisis. The scope of the EU cross-border bank group is shown to be determined through the transnational interplay between prudential regulation, crisis prevention measures and internal risk management procedures provided for in EU resolution law. The bespoke cross-border governance regime for EU bank groups is analysed through the building blocks of inter-institutional cooperation, group departitioning, corporate governance innovations and specific regulatory objectives. Group governance entails a mechanism for balancing the enabling and the protective elements, i.e. legal strategies which either enable a group-wide perspective or protect local markets and entities. The monograph concludes with considerations of the possible implications of such a bespoke law of EU cross-border bank groups and their function of providing critical functions across borders.