Goodhart, Charles and Schoenmaker, Dirk
(2016)
The global investment banks are now all becoming American: does that matter for Europeans?
Journal of Financial Regulation.
fjw012.
ISSN 2053-4833
Abstract
In the aftermath of the global financial crisis, the market share of US investment banks is rising, while that of their European counterparts is declining. We present evidence that US investment banks are on the verge of taking over pole position in European investment banking. While the US players have thus become dominant in Europe, China has taken matters into its own hands. Since 2015, Chinese investment banks have overtaken the position of American and European investment banks in the Asian-Pacific market. Credit rating agencies and investment banks are the gatekeepers of the Capital Markets Union. The supervisory agencies in Europe can effectively supervise the European operations of these US managed players. We discuss the consequences of Brexit. On the political side, we suggest that the European Commission should keep on viewing its, albeit declining, banking industry as a strategic sector. The Commission, the European Central Bank and the Bank of England should jointly develop a strategic agenda for the EU–US Regulatory Dialogue. Finally, corporates rely on investment banks to issue new securities. We recommend that the big European corporates should cherish the (few) remaining European investment banks, by giving them at least one place in a further US dominated banking syndicate. That could help to avoid complete dependence on US investment banks.
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