Banking on States: Institutionalised Patterns of State-bank Coordination and Post-crisis Sectoral Strategies Towards Domestic Large Banks in France, the UK and Germany

Ten years after the crisis, European “Too Big To Fail” (TBTF) banks have known different fates. During this last decade, important financial regulation has been crafted at the international and European levels. Yet, a close examination of major policies at the domestic level shows that political strategies towards TBTF banks have varied across countries. These different political strategies largely coincide with the actual market evolutions of TBTF banks, confirming the idea that policy matters in finance. Despite the convergence in European banking’s market practices and a common regulatory framework, how can we explain variations in countries’ sectoral strategies towards TBTF banks? The formal institutions characteristic of post-war models of capitalism have disappeared, but other, less formal and arguably less stable, institutions have replaced them. Those institutions shape routine modes of coordination between banking and state actors. More specifically, they shape the way actors’ preferences are shaped and whether and how power resources are used. Institutionalized patterns of state-bank coordination determine which actors occupy key position in decision-making processes, which preferences finds political expression, and the forms of conflict that ensue. This analytical framework allows us to understand the mechanisms leading to typical domestic strategies towards TBTF banks after the crisis.