Maltese MEP Alfred Sant has told the European Parliament that it needs to be ensured that smaller banks in the eurozone's smaller economies such as that of Malta do not become more risk-averse by inhibiting their exposure to financial services in their national economies.
More importantly, he said, such financial institutions should not become less competitive when lending to small and medium sized industries.
"Not all banks will be equal," Dr Sant stressed. "The least able to counter such considerations will be the banking systems of medium to small member states, especially in economies where financial services have become a significant sector."
Dr Sant said that a banking union should serve to create transparency of operations across banks in the EU while shielding national governments from the burden of bailouts, should their big banks collapse.
"Theoretically, all banks would need to be treated equally, subject to the particular conditions of their national economic environments.
"However, the Resolution Authority will inevitably be coloured by political considerations of a multilateral nature, as is happening now in the European Central Bank. It is quite likely that the political dynamics of the Resolution Authority will hardly differ from those of the Eurogroup when, for example, the latter was dealing with southern European countries."
Dr Sant voted in favour of the appointment of members of the Single Resolution Board (SRB), an independent body that is to manage the resolution of failing banks in the eurozone. The European Parliament approved the nominees with 522 votes in favour, 105 against and 67 abstentions.
The candidates had already been approved by the Economic and Monetary Affairs Committee meeting at which Dr Sant had grilled Elke König, the sole candidate to become head of the Single Resolution Board.