Universal Banks: Successful, yet Under Threat

Universal banks are the predominant model of banking in Europe. Under the umbrella of the term “universal banking”, a wide variety of different models co-exist. What is common to them is their ability to serve the diverse needs of their client base which, in turn, reflects the great diversity of Europe's economies. Universal banks have not only been the financial foundation of the growth of Europe over the past decades, they have also proven resilient in the face of the various crises that engulfed Europe during that period, including the Great Recession of 2009 and thereafter. Yet, notwithstanding this resilience, the universal banking model in Europe has lately come under regulatory scrutiny. Plans for fundamental reform to Europe's banking system, like the Liikanen proposals, constitute a material threat to the universal banking model.