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Journal of International Economic Law Advance Access published online on July 9, 2008
Journal of International Economic Law, doi:10.1093/jiel/jgn020
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© Oxford University Press 2008, all rights reserved

Testing European Prudential Conditions for Banking Mergers in the Light of Most Favoured Nation in the Gats

Bart De Meester*

Correspondence: * Research Fellow Fund for Scientific Research Flanders (FWO Vlaanderen) at Institute for International Law, Leuven University. I am grateful for the comments by Professor Geert Van Calster, Professor Markus Krajewski, and Mr Dominic Coppens. Any remaining mistakes are mine. E-mail: bart.demeester{at}law.kuleuven.be.


  Abstract

This contribution examines how European conditions for takeovers of a European credit institution by a non-European credit institution may be assessed under the principle of Most Favoured Nation (MFN) in the General Agreement on Trade in Services (GATS). The article considers that violations are not unimaginable since current WTO case-law on ‘likeness’ insufficiently takes into account the risks that are linked to different prudential frameworks in which banks operate. However, a differentiation among banks from different trading partners through decisions on the ‘equivalence’ of consolidated supervision by certain non-European authorities with European supervision, may be saved under the GATS provisions on recognition. Nonetheless, lack of transparency in these decisions may remain problematic. Even if the prudential carve-out provides a broad exception for prudential measures, it may not necessarily justify this deficiency. The article illustrates how the European rules comply with GATS requirements and how consistency could further be ensured. It is shown that international prudential standards may play an important role in the interpretation of these provisions. The article argues that the GATS-scrutiny as well as the importance of international standards requires the European Union to intensify its efforts on international standard-setting.


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