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EU: Commission missed the mark on banks during financial crisis, says study

By  |  May 9, 2013

A new study released from the University of East Anglia claims that the European Commission did not focus enough on the competitive health of the banking sector during the financial crisis from 2007 to 2010. The study, which has been published in the Journal of Industry, Competition and Trade, finds that the regulator failed to pay enough attention to the negative effects of market concentration due to subsidized mergers during the financial crisis. Specifically, the study points to effects of the merger between Lloyds TSB and HBOS; Lloyds received today’s equivalent of $31 billion in state aid back in 2009 after the merger, but was ordered by the Commission to divest 632 of its branches. Just last month, however, Co-op pulled out of its agreement to buy those branches. The study additionally suggests that state aid given to banks during the time period was excessive.

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