The European Parliament voted in April to approve a single rule-book for a banking union to include eurozone members, and any non-euro EU countries that want to join. But just days earlier, a decision with Europe-wide implications appeared to have been taken with little international discussion. National Bank of Greece (NBG) and Eurobank, two of the largest banks in Greece, announced that their planned merger had been suspended by the authorities. The two banks are to be recapitalised separately as part of the eurozone bail-out of Greece.
The merged entity would have represented about half the Greek banking sector by assets. Coming on the heels of the chaotic bail-out in Cyprus in March, this sudden merger suspension raises important questions about exactly how a banking union would operate. The term ‘union’ does not seem appropriate for a situation in which creditor nations simply decree the fate of systemic banks among the debtors.
