The current system has worked reasonably well so far for these banks, and is expected to do so in the future. At least as long as their cross-border activities are relatively limited in relation to their overall size. However, on top of this, there is also a category of banking group in Europe with significant crossborder activities for which the current system may not be so well adapted. Some banking groups, for example, have extensive activities in several countries. The Italian Unicredit Group will, following the merger with the German HypoVereinsbank (HVB), be a significant banking group – not least – here in Poland, but also in, for example, Austria, the Czech Republic, Germany, Hungary, and Italy. Moreover, the British group Barclays has extensive operations in Spain, while the Spanish Grupo Santander has substantial activities in the United Kingdom. Fortis and Dexia are similarly important in the Benelux region. And then there are banking groups that have a systemic significance in their host countries. For example in countries such as the Czech Republic, Finland, Hungary, Lithuania, Poland and Slovakia foreign banking groups have a dominant position in the domestic bank markets. Generally speaking, foreign penetration of the banking market is substantial in the New Member States (NMS). According to an ECB report, about 70% of the NMS banking sector is foreign-controlled, mostly by other EEAcountries. Speaking from a Nordic-Baltic perspective, more than 90 percent of lending in Estonia is granted by Swedish and Finnish banking groups.
Some MoUs focus primarily on supervision, whereas others involve crisis management as well. Notably, they are not legally binding and give the national authorities considerable scope for discretion. Although the emergence of these MoUs is very positive, they are no guarantee for efficient crisis management. Probably, these MoUs will work well under normal conditions. And they will also be most helpful in facilitating coordination in some financial crises. However, in a more wide-spread crisis involving a large cross-border bank, MoUs alone will probably be insufficient. Take, for example, the issue of assessments. We have in Europe in principle agreed to share each other’s views and assessments in the event of a distress scenario. However, to be able to act decisively in a crisis situation involving a large cross-border bank, you would preferably need a joint assessment between the countries involved. I don’t think it would be too speculative to think that each country in an acute situation would be prone to present an assessment that supports its national interests as part of a negotiation strategy. Arriving at a joint assessment may therefore prove difficult, and above all take valuable time away from crisis management. To be able to act efficiently in a crisis situation, it is instrumental that conflicts of interests, as far as possible, are taken care of in advance. For that you need something more than the MoUs we have seen so far.