Since the start of the financial crisis we experienced a sharp overall contraction of cross-border banking, in Europe as well as at the global level. The mild recovery in indicators of banking markets integration flattened out since 2016, at levels well below the pre-crisis ones. M&A transactions have fallen in number and volume to minimum levels since year 2000, with cross-border deals representing a less and less significant share. Ring fencing of local establishments and repatriation of business have been key policy responses of national authorities. Even in the euro area, notwithstanding the Banking Union, private risk sharing via the credit channel has not materialised – banks have actually amplified external shocks. Brexit may lead to further barriers and frictions in cross-border banking, given the pivotal role played by the City in euro denominated transactions in money and capital markets. What are the policy challenges facing authorities to restore integration in banking markets? The policy debates on the completion of the Banking Union and on the arrangements to contain the risks of Brexit are now coming to a crucial juncture. Their outcomes will shape the structure of banking and financial markets in the years to come.