Competing Interest
Groups and Lobbying
in the Construction
of the European
Banking Union
Giuseppe Montalbano


Competing Interest Groups and Lobbying in the
Construction of the European Banking Union


Giuseppe Montalbano

Competing Interest
Groups and Lobbying
in the Construction of
the European Banking
Union


Giuseppe Montalbano
Department of Political Science
LUISS Guido Carli Free International University
Rome, Italy

ISBN 978-3-030-65424-5    ISBN 978-3-030-65425-2 (eBook)
/>© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
Nature Switzerland AG 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of

translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the
­publisher nor the authors or the editors give a warranty, expressed or implied, with respect to
the material contained herein or for any errors or omissions that may have been made. The
publisher remains neutral with regard to jurisdictional claims in published maps and
­institutional affiliations.
Cover illustration: © Alex Linch shutterstock.com
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG.
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland


To my parents


Acknowledgments

This work is the product of a long journey that started with my Ph.D. at
LUISS Guido Carli in Rome and continued in the subsequent post-doc
years, going through many phases of my academic life, changes of mind,
and challenges. For sure, the birth and realization of this book would not
have been possible without those scholars and friends who have accompanied me in the course of its development and several remakes. First of all,
I have to thank Leonardo Morlino for having accepted to be my

Ph.D. supervisor at LUISS Guido Carli and for guiding me in the thesis
work. I want to reserve a special thanks to Bastiaan Van Apeldoorn, whose
work has been a veritable source of inspiration for my thesis and who then
became a precious guide in the development of my research project as co-­
supervisor. Of course, my Ph.D. project has been enriched, thanks to the
fruitful dialogue and exchanges with my colleagues and scholars at
LUISS.  In particular, I would like to thank Raffaele Marchetti for his
advice on issues related to participatory democracy and Civil Society
engagement at the EU level; Domenico Melidoro, for being a unique
reference point during the Ph.D. years; Silvia Menegazzi, for our conversations and mutual support. Particular thanks are due to Mario Telò, who
introduced me to teaching International Relations and European
Integration, becoming a key reference figure for my academic career growth.
After my Ph.D., the continuation, refinement, and further development of this work owe much to scholars and colleagues who enriched my
understanding of the EU financial regulation through their suggestions,
constructive criticisms, and confrontations. Thus, I have to thank Manuela
Moschella for giving me the opportunity to work at the Department of
vii


viii 

ACKNOWLEDGMENTS

Political Science of the Scuola Normale Superiore in Florence and all the
post-doc colleagues at Palazzo Strozzi, in particular the “quartermaster”
Lorenzo Zamponi and Loris Caruso. During my post-doc in Florence, I
had the luck to meet Lucia Quaglia, whose advice and support have been
invaluable for the prosecution of this research and to whom I want to give
a special acknowledgment here. The conferences and seminars in my post-­
doc years have been a unique source of stimulus and advice from outstanding scholars and colleagues who contributed unwittingly to the further

elaboration of this work. Here I would like to recall and thank Daniel
Mügge, Eleni Tsingou, Leila Simona Talani, Radhika Desai, David
Howarth, and Huw Macartney for their observations, criticisms, and
suggestions.
Lastly, my gratitude goes to all those friends of mine around Italy and
Europe who, at the same time, put up with me and supported in the ups
and downs of such a research journey: my music-mates “Utveggi,” my old
and new colleagues at Scuola Normale and LUISS Guido Carli, and my
“battle buddies” in Pisa, Rome, and around Italy. However, a special place
must be reserved for Claudia, who supported me more than anyone else,
being always close to me, even at a distance.
My last thanks go to my brother and first among all the friends of mine,
Gabriele, and to my parents, Maria Teresa and Luigi, to whom this book
is dedicated.


Contents

Part I  1
1Introduction  3
The Argument   7
Structure of the Book  10
Bibliography  12
2A Critical Transnationalist Approach to the European
Financial Governance 15
Beyond the Domestic/Supranational Dichotomy in the European
Integration Theory  16
Research Design  34
Methodology and Sources  37
Bibliography  39

3The Banking Industry in the Aftermath of the Financial
Crisis 53
The European Banking Industry in the Wake of the Twin Crises  54
Mapping Interest Groups in the EU Banking Regulation  75
Issue Salience  88
Bibliography  91

ix


x 

CONTENTS

Part II  97
4The Supranationalization of Banking Supervision in Europe 99
The Construction of the Single Market and the Idea of a Single
European Supervision 102
Seizing the Moment: The European System of Financial
Supervision 107
The Single Supervisory Mechanism 117
Conclusion 133
Bibliography 135
5The Crisis Management Framework and the Single
Resolution Mechanism147
The European Agenda 149
Policy Definition 153
The BRRD in the Context of the SRM 158
The Construction of the SRM 165
On the SRB 167

The SRF 170
The Negotiations 173
The SRM and the SRF 175
Conclusions 184
Bibliography 186
6The Unbacked Backstop: The European Deposit Insurance
Scheme197
Setting the Principles for Global Deposit Insurance 199
The Revision of the DGS Directive 201
The DGS Directive 211
The Prospects of the EDIS 213
The de Lange Report 219
The Stalemate in the EDIS Negotiations 221
Conclusions 222
Bibliography 224
7The Reform of the Prudential Framework and the Single
Rule Book229
Setting the International and European Agenda 231


 CONTENTS 

xi

Basel III and the Commission Proposal 235
The Negotiations 240
The CRR/CRD IV Package 244
A Banking Package to Get the Post-crisis Job Done? 246
Banks Efforts to Review the CRR/CRD IV 248
The Commission Proposal of a Banking Package 255

Negotiating the Banking Package 258
Final Regulation and Directive 261
Conclusions 262
Bibliography 265
8The Forgotten Pillar: On the Rise and Fall of the Banking
Structural Reform277
On the International Agenda 279
The Liikanen Report and the Commission Proposal 281
The Reform Initiatives in the UK, Germany, and France 283
The Stakeholder Consultations 289
The Commission Proposal 292
The Draft ECON Report 295
The Council Agreement 296
The Stalemate and Failure of the Reform 297
Conclusions 298
Bibliography 302
9Conclusions311
Bibliography 321
Bibliography323
Index327


Abbreviations

ABI
AEB
AFME
BaFin
BBA
BCBS

BDB
BDI
BEUC
BIS
BPCE
BRRD
BSR
BVR
CEBS
CEECs
CMU
CRD
CRR
DG FISMA
DGS
DK
DSGV
EACB
EAPB
EBA

Italian Banking Association
Spanish Banking Association
Association for Financial Markets in Europe
German Federal Financial Supervisory Authority
British Bankers’ Association
Basel Committee on Banking Supervision
Association of German Banks
Federation of German Industries
European Consumer Organisation

Bank for International Settlements
Banques Populaires et Caisses d’Epargne
Bank Recovery and Resolution Directive
Banking Structural Reform
Association of German Cooperative Banks
Committee of European Banking Supervisors
Central and Eastern European Countries
Capital Markets Union
Capital Requirements Directive
Capital Requirements Regulation
European Commission Directorate General Financial Stability,
Financial Services and Capital Markets Union
Deposit Guarantee Scheme
German Banking industry Committee
Association of German Savings Banks
European Association of Co-operative Banks
European Association of Public Banks
European Banking Authority
xiii


xiv 

Abbreviations

EBF
EBIC
EBU
ECB
ECOFIN

ECON
EDIS
EFDI
EFR
EFSF
EMU
EP
EPFSF
ESA
ESBG
ESFS
ESM
ESRB
EU
FBF
FSA
FSAP
FSB
G20
G30
GDP
GFMA
HLEG
HSBC
IADI
IIF
IMF
IPE
IRB
ISDA

LCR
LIBA
LTRO
MEDEF
MEP
MOU

European Banking Federation
European Banking Industry Committee
European Banking Union
European Central Bank
Economic and Financial Affairs Council
European Parliament’s Committee on Economic and
Monetary Affairs
European Deposit Insurance Scheme
European Federation of Deposit Insurers
European Financial Services Round Table
European Financial Stability Facility
Economic and Monetary Union
European Parliament
European Parliamentary Financial Services Forum
European Supervisory Authority
European Savings and Retail Banking Group
European System of Financial Supervision
European Stability Mechanism
European Systemic Risk Board
European Union
French Banking Federation
Financial Services Authority
Financial Services Action Plan

Financial Stability Board
Group of Twenty
Group of Thirty
Gross Domestic Product
Global Financial Markets Association
High-Level Expert Group
Hong Kong and Shanghai Bank of Commerce
International Association of Deposit Insurers
Institute of International Finance
International Monetary Fund
International Political Economy
Internal Ratings-Based Approach (Risk Calculation)
International Swaps and Derivatives Association
Liquid Capital Ratio
London Investment Banking Association
Long-Term Refinancing Operation
Movement of the Enterprises of France
Member of the European Parliament
Memorandum of Understanding


 Abbreviations 

MPS
NFC
NSFR
NVB
RBS
SGP
SIFMA

SMEs
SRB
SRF
SRM
SSB
SSM
TEU
TFEU
UEAPME
UK
US
VÖB
VZBV
ZKA

xv

Monte dei Paschi di Siena
Non-financial Company
Net Stable Funding Ratio
Dutch Banking Association
Royal Bank of Scotland
Stability and Growth Pact
Securities Industry and Financial Markets Association in the US
Small and Medium-Sized Enterprises
Single Resolution Board
Single Resolution Fund
Single Resolution Mechanism
Single Supervisory Board
Single Supervisory Mechanism

Treaty on European Union
Treaty on the Functioning of the European Union
European Association of Craft, Small and Medium-Sized
Enterprises
United Kingdom
United States
Association of German Public Banks
German Consumers Association
German Banking Industry Committee


List of Figures

Fig. 3.1
Fig. 3.2
Fig. 3.3
Fig. 3.4
Fig. 3.5
Fig. 3.6
Fig. 3.7
Fig. 4.1
Fig. 5.1
Fig. 6.1
Fig. 6.2

Return on equity (RoE), percentage, EU banks
55
Gross non-performing loans as percentage of total gross loans
58
Market concentration. Shares of five largest credit institutions in

total assets (C5) and Herfindahl-Herfindahl Index (HHI)
60
Interbank market dependence, EU large banks, total EU and
Eurozone banks
66
Short-term wholesale funding ratio, as percentage of total items
providing stable funding, total EU
67
News coverage, keywords “banking crisis” and “banking
reform/regulation,” 2007–2018, selected news outlets,
percentage of total news
89
News coverage, keywords “banking crisis” and “banking
reform/regulation” (combined), 2007–2018, selected news
outlets, percentage of total news. Selected EU countries
90
News coverage, keywords “bank supervision” and
“Eurozone crisis,” selected newspapers, percentage of total
news, 2007–2018
108
News coverage, keywords “bank resolution” and “bank
bail-out.” Selected newspapers, percentage of all news,
2007–2018150
News coverage, keywords “deposit insurance” and “debt
mutualization,” selected newspapers, percentage of total news,
2008–2018207
News coverage, keywords “debt mutualization,” selected
newspapers, single countries, percentage of total news,
2008–2018210


xvii


xviii 

List of Figures

Fig. 7.1
Fig. 8.1

News coverage, keywords “banks’ capital and liquidity
requirements” and “bank reform,” selected newspapers,
percentage of total news, 2007–2018
News coverage, keywords “banks too big to fail,” selected
newspapers, percentage of all news, 2007–2018

232
284


List of Tables

Table 2.1
Table 3.1

Influence conditions, under high structural power
Lobbying expenditures declared by the top banks in the
EU, 2015

36

85

xix


PART I


CHAPTER 1

Introduction

We need a new deal between financial regulation and society. A deal in which
financial services are back at the service of the real economy. And at the
service of citizens…. (Barnier 2010)

The atmosphere at the 8th European Financial Services Conference in
April 2010 was rather tense. The call for a “new deal” by Commissioner
Barnier, head of the directorate on financial services’ regulation in the
European Union (EU), did not bode well for the representatives from the
European banks and financial firms present in the room. Those bankers
and financiers were among the principal signatories of an old tacit deal,
whose sudden and violent disruption started in the second half of 2007, in
what the International Monetary Fund (IMF) labeled as the worst financial crisis since the Great Depression (IMF 2008: 4). Outside the BNP
Paribas Fortis Auditorium, the global financial turmoil was still unfolding
and triggering in those same months the outburst of the Eurozone sovereign debt crisis. The dominant regulatory philosophy, which drove the
extraordinary expansion of the financial markets between the US and the
EU from the 1990s onward, turned against the same policy communities
which nurtured it. Governments, regulators, and even market incumbents
questioned the excessive confidence in a general market-led approach,

dominant in the US and UK regulatory infrastructure, bringing to the
liberalization and expansion of the international financial markets. An
© The Author(s), under exclusive license to Springer Nature
Switzerland AG 2021
G. Montalbano, Competing Interest Groups and Lobbying in the
Construction of the European Banking Union,
/>
3


4 

G. MONTALBANO

optimistic reliance on the financial markets’ self-discipline and benefits
favored a spectacular growth of increasingly risky and remunerative business (Foster and Magdoff 2009; Posner 2009). An essential premise for
such a mounting disaster was the spread of a “market-based” banking
model, defined as the dependence of the banks’ business and profits,
including core retail activities, in the financial markets (Hardie and
Howarth 2013: 24–27). Market-based and investment banking developed
in parallel with the construction of an EU single market in financial services and the Economic and Monetary Union (EMU). In those years of
monetary and financial integration, the majority of EU States differently
experienced a growth in the financial services compared to their gross
domestic product, based on the banks’ increasing reliance on the securitization activities and other structured products, which boosted profits
together with the debt levels. The expansion of cheap consumer credits
and the development of private indebtedness provided a temporary legitimacy of the financialization process (Epstein 2005; Duménil and Lévy
2004; Abdelal 2007), by forging the indebted governments and citizens
as new main characters of a financial and private Keynesianism (Crouch
2009; Bellofiore 2012, 2013; Bellofiore and Halevi 2010). In the run-up
to the crisis, banks from Germany, the UK, and Northern countries funneled their credit flows into the euro-periphery, fueling its private indebtment and crucially contributing to deepening the structural economic

divergencies within the Eurozone (Tooze 2018: 101–6). At the same
time, the growth in consumption and the real estate boom in Southern
Europe were premised on the increasing exposure of the domestic banks
to the international financial markets, the rapid de-industrialization of the
national economies, and the related deterioration in the current account
balances (Bellofiore et al. 2011; Lindner 2013; Celi et al. 2017: 69–70,
101–106). The outburst of the global financial crisis suddenly interrupted
the financial flows and the banks started to cut their riskier exposures. The
economically weaker countries and their banking sectors in Europe were
left to sink in the absence of a common fiscal safety net, triggering a large-­
scale sovereign debt crisis and recession, which would amplify the macroeconomic asymmetries among Eurozone countries. The fragile
financial-based order underpinning the EMU collapsed, revealing the
structural and institutional flaws of the Eurozone. A huge bill to pay was
then presented to the most vulnerable citizens and social groups across
Europe. The deal between policy-makers and bankers waned and the trust
toward finance eroded.


1 INTRODUCTION 

5

As the states heavily intervened in US and EU Member States to bail
out defaulting banks with taxpayers’ money (Grossman and Woll 2014;
Woll 2014; Culpepper and Reinke 2014), the financial sector’s responsibilities came to the spotlight of the public opinion. The privileged and
behind the scenes relationship with national and European policy-makers
was suddenly disrupted. In this way, the global turmoil determined a legitimacy crisis of the previous market-based financial governance (Helleiner
2010, 2014: 94–100; Helleiner and Pagliari 2010, 2011; Baker 2010),
leading to a deep re-orientation of the international financial regulatory
community.

In the peculiar case of the EU, the banking crisis threatened the same
viability of the EMU and the prospects of European integration. The
impact of the US-subprime crisis in Europe unveiled the inner tensions
resulting from the design of the monetary union. The Eurozone integration was premised in the problematic coexistence of the common currency, the liberalization of capital markets and the competition of national
banking systems embedded in variegated public/private patterns of capitalist developments, without a centralized supervisory and crisis management authority, and the lack of a Europeanized lender of last resort
function to compensate the loss of monetary policy at home (Schoenmaker
2011; Toporowski 2015). The common currency narrowed the economic
sovereignty of the Member States, while incentivizing a market-led provision of cheap credit and the expansion of securities markets. Likewise, the
enhanced international capital mobility and the loss of monetary authority
made the States’ competitiveness and financing needs increasingly dependent on financial markets, leaving them with no other adjustment strategy
than the internal devaluation. In such a context, the national banking sectors expanded their activities and profits thanks to the favorable market
conditions created by the monetary union, capital liberalization, and the
building up of the Single Market in the Financial Services, fostering the
competitive positions of cross-border firms (Bieling 2006; Bieling and
Jäger 2009). Thus, the compromises and loopholes in the building up of
the EU financial regulatory framework unfolded through the conflicts
among national strategies of restructuration and the interests of
transnational-­oriented constellations of actors (Mügge 2006, 2010).
In such a process, the Member States’ authorities protected and incentivized the domestic-oriented financial firms’ expansion under nationally
fragmented supervisory authorities and regulatory discretions (Quaglia
2010; Epstein and Rhodes 2016; Epstein 2017: 30–34). Thus, domestic


6 

G. MONTALBANO

banks developed in symbiosis with national authorities exploiting the
opportunities opened by the EMU, while the States became increasingly
subjected to the international markets, being deprived of the monetary

authority, without a correspondent lender of last resort, a macroeconomic
and fiscal authority, and a common supervisory infrastructure at the EU
level (Schoenmaker 2011, 2013: ch. 1). From 1999, the development of
financial markets and products in a new competitive race between US and
European banks prompted the concentration of risks and opened the
channels of potential contagion in the Eurozone, bolstering the interdependence and reciprocal vulnerability of States and banks. The European
banks came to internationalize themselves, while remaining rooted in the
respective States as a last resort guarantee against the systemic accumulation of financial risks, which then became implicitly collectivized (Epstein
and Rhodes 2014: 9). The competition among EU banking interests nurtured the expansion of domestic financial firms, as well as cross-border
champions, while feeding those systemic vulnerabilities triggering the
2007/2008 financial crisis in the EU. Such institutional flaws and competition dynamics interacted in the context of a global credit boom, steadily
inflating the private and public debts in a context of sluggish economic
growth among euro-periphery countries, setting the premises for the rising current account imbalances within the Eurozone. The banks who
inflated the financial bubble and saw their profits soar in the pre-crisis
years were now the same to be rescued with taxpayers’ money to prevent
the collapse of the European economies. At the center of the global financial turmoil and its transmission into the Eurozone crisis, the bankers and
their responsibilities became the major target of an international
reform agenda.
Rewriting the banks’ rules soon became the grounding premise for that
“new deal,” which would have to resolve a “double” financial and existential crisis for the European project. Such a deal took form in a tight EU
reform agenda on all the key aspects related to the existing banking regulation: from the supervision of the credit institutions to their crisis management and the prudential requirements, up to the protection of the
banks’ depositors and the putting into question of the same bank business
structures. At the height of the sovereign debt crisis, the overhaul in banking regulation became the basis of a major institutional innovation in
European integration history. The project of a European Banking Union
(EBU) emerged in the first half of 2012 as a major and viable response to
end the Eurozone crisis and fix the flaws in the EMU, which resulted from


1 INTRODUCTION 


7

a cross-border banking integration without correspondent supranational
supervision, resolution, deposit insurance, and financial backstop.
Integrated banking governance in the Eurozone was intended to break
the reciprocal risk transmission links between bank and sovereign debts
and halt the EMU fragmentation. In this way, the prospected deal between
finance and society would have paved the way for the euro’s future and the
same European integration.
The main question of this study can be summarized as follows: what
have been the terms and contents of this emerging “new deal” between
financial regulation and society in the EU? A question inseparable from a
second one: who were the most influential drafters and the actual signatories of such a new deal? What were the key interests and societal groups at
stake in the EU post-crisis reform process and the ensuing design of the
Banking Union?

The Argument
This book addresses the above questions by investigating the interests and
influence of the banking industry in the post-crisis regulatory reform of
the EU banking governance and the overall design of the Banking Union.
The argument here presented is that the élite of banks retained the capacity to condition a new deal between finance and society in Europe,
although in different terms with respect to the pre-crisis one. While
endowed with fundamental structural and lobbying resources to advance
their preferences in the reform process, the banking industry had to face a
politicized regulatory environment, requiring a re-orientation of their
strategies and goals. From one side, the cross-border banking interest
groups engaged in the reform agenda to promote and steer the supranationalization of financial regulation in Europe, as a fundamental goal that
soon overlapped with those of the EU regulators. On the other side, the
increased policy salience of banking regulation after the crisis opened
unique windows of opportunity for pro-regulatory societal interests and

policy entrepreneurs to sustain a hard-regulatory agenda. In such a context, the bankers’ chances to influence the policy-making process hinged
on their capacity to build up broader alliances at the domestic and
European levels. As it will be shown, European bankers tried to mediate
between two imperatives for the EU policy-makers: (re)regulating the
European financial system, while not disrupting the bank funding channels and essential functions to the real economy. A vital strategy of the


8 

G. MONTALBANO

banking lobbies was that of anticipating and pandering to the reform process to either prevent or water down at least the most burdensome measures. The reform agenda brought to multiple patterns of competition
among banks, depending both on the banks’ business models and then—
as the sovereign crisis was exacerbated—on their being headquartered in
surplus or deficit Member States. The extent and direction of the corporate influence are thus linked both to public issue salience and to the competitive cleavage set by the crisis.
This study offers an innovative contribution to the academic and policy
debates on the European banking regulation after the crisis from both a
theoretical and empirical point of view. Regarding the former, an original
critical International Political Economy (IPE) approach is designed, which
combines structural power, the collective agency of key socio-economic
groups, and the public salience of regulatory issues as critical determinants
to explain corporate actors’ influence. The structural level defines the interdependence between corporate interests and public authorities in the context of national varieties of capitalism embedded in the European market for
financial services. Such a structure sets the terrain for the collective agency
of conflicting socio-­
economic interests. At this second level, the actors
coalesce into organized interest groups and socio-economic coalitions,
depending on the policy issues at stake, the lobbying resources, and the
transnational and domestic actors’ policy entrepreneurship. Lastly, the influence of competing socio-­economic groups is crucially affected by the political context, here understood as the degree of policy issue salience, shaping
the EU decision-makers’ orientations in the financial regulatory process.
An explanatory mechanism is thus hypothesized to assess the corporate

influence capacity in “hard times,” linking structural factors and the
coalition-­making capabilities with the political salience of financial issues
in the different stages of the policy-making. According to the hypothesis
here tested, the increased public salience of banking regulatory issues
threatens the established private-public regulatory relationships. It offers a
window of opportunity for a broader range of social interests to make their
voice heard, and constrains corporate interests to align with the new public authorities’ concerns and goals. During a high policy salience moment,
corporate interests are incentivized to coalesce into broader and more
inclusive interest coalitions if they want to rebuild their influence capacities. Such a coalition-building depends on structural factors (setting the
grounding inter-sectoral and socio-economic cleavages) and the initiative
of critical corporate policy entrepreneurs, like the trade associations and


1 INTRODUCTION 

9

lobbying groups. They must mediate among the different socio-economic
interests involved to forge unitary policy demands and acceptable public
narratives vis-à-vis the policy-makers.
The geographical and sectoral scope of the coalition shapes the patterns
of influence. The broader the coalition-making capacity at the European
level, the greater can be expected to be the influence over the EU-level
policy-makers, together with the chances for weaker interest groups to get
what is demanded in the reform outcomes. On the contrary, the more the
fragmentation across sectoral and geographical lines, the more will be the
influence capacity for domestic corporate coalitions endowed with massive
structural power resources in the European core economies. In the latter
case, domestic-oriented banking interests from core European economies
are expected to retain more influence, if they manage to put their preferences in terms of national interest to the eyes of the domestic authorities.

Conversely, when the public salience of regulatory issues is low, corporate
interests have less need to mediate their preferences and can exert a stronger direct influence over the policy outcomes, depending on their structural power resources. As it will be shown, the interactions among
corporate structural power, the interest groups’ coalition-making capacities and the public issue salience, can help to explain the achievements and
flaws of the European post-crisis banking governance, integrating the
existing scholarly accounts.
The explanatory framework is applied to a comprehensive historical
analysis, tracing the Banking Union’s development within the broader
context of the EU post-crisis initiatives in banking regulation. An in-depth
scrutiny of the interest groups’ preferences and influence is thus provided
across the main pillars of the EU banking governance and throughout the
whole reform cycle, from the aftermath of the financial crisis until the
finalization of the capital requirements regulation, with the Banking
Package in 2018. The stakeholders’ positions and patterns of influence
will be analyzed in relation to the three policy-making stages here taken
into account, together with the correspondent EU institutions playing the
leading role in them: (1) the agenda-setting; (2) the formulation of the
policy proposal (European Commission); and (3) the negotiations in the
Council and the European Parliament leading to the final legislation.
During the agenda-setting and policy-definition stages of the EU policy-­
making process, interest groups strive to condition the very terms of a
reform initiative. In later negotiating stages, however, their potential influence is limited to the (often crucial) details of the regulation or, at best,


10 

G. MONTALBANO

directed at watering down the whole legislative proposal. Thus, the issue
salience and coalition-making capacities at the different policy-making
stages heavily condition the corporate chances of success in the regulatory

process. The post-crisis reform agenda-setting in banking regulation and
the subsequent Banking Union have been laid down in a high political
salience environment, thus providing a crucial test bench to assess the
behavior and lobbying strategies of a corporate community under stress.

Structure of the Book
The book is structured in two main parts. The first part presents the theoretical premises, the analytical framework and the overall competitiveness,
lobbying and issue salience dynamics in the aftermath of the crisis. In the
second part, the analytical framework is applied to five case studies, covering the main reform initiatives in the EU banking regulation, which have
been linked to the Banking Union’s construction.
Chapter 2 introduces an original critical IPE theoretical framework in
the analysis of the EU financial regulation. First, the chapter offers a review
of the literature on the EU post-crisis financial regulation and corporate
influence, discussing its merits and shortcomings. A critical transnationalist approach is thus outlined, built on the Neo-Gramscian literature in
IPE. Structure and agency both shape the emergence of conflicting transnational coalitions of socio-economic interest groups and policy-makers.
Structural determinants, lobbying resources, and political factors are
linked together in a three-tier analytical framework to assess the leading
public-private coalitions and their influence capabilities at the EU level.
Chapter 3 offers an overview of the European banking industry between
the global financial turmoil and the sovereign debt crisis outburst. It provides the essential coordinates for analyzing the case studies, by elucidating the overall industry’s structural conditions, competitive patterns, and
lobbying resources, together with the public salience of banking issues.
Opening the second part, the first case study of Chap. 4 deals with the
reform of banking supervision in the EU, from the creation of the
European Banking Authority (EBA) up to the implementation of the
Single Supervisory Mechanism (SSM). It is argued here that the European
cross-border banks rode the wave of the post-crisis reform agenda to push
for a supranationalized framework in banking supervision, as their long-­
standing demand.