This paper draws attention to the new dynamics of the politics of bank ownership on EMU /EU’s periphery. In Slovenia, where state and domestic control of banks has been high ever since transition and independence, major bank privatization to foreign owners is underway. In Hungary, where state and domestic control of banks has been very low, the Orban government bought foreign owned banks to sell them to well-connected Hungarian owners. These diverging trends are puzzling for a number of reasons. First, they represent a break with past policies and concepts with regards to the functioning of market economy in the two countries. Second, both processes are driven by post-GFC logics for a need to restructure banking, yet they lead to very diverging outcomes. Explanations emphasizing the different international regulatory regimes (EMU/BU for Slovenia and only EU for Hungary) or the character and particularities of banking crisis conditions are not sufficient to explain these trends as in both cases external constraints delimited policy options but did not define the final course of banking policy. Instead, we must look at the politics of bank ownership within the two countries to understand the outcomes. We explore how international factors were differently interpreted and acted upon within the different institutional environments of the two countries. The findings point to serious alterations of democratic conditions in both countries, however, to different degrees and with diverging consequences. Nevertheless, both anti-democratic processes are connected to EU integration dynamics and cause for concern for all EU member states.
