The current COVID-19 sanitary and economic crisis requires a “New Deal” between EU governments and EU banks: EU banks agree to partner with governments in enabling the effective transmission of the government’s vital financial support to the real economy in exchange for a transformation of the EU banking sector. This deal consists of a quid pro quo: governments condition the transmission via the banking sector of considerable monies to the real economy on a rationalization of the EU banking sector, which thus would become part of the post-COVID-19 “new normal.”To be successful, this unparalleled support of the EU economy will come with governmental guarantees and fees for banking services. Banks partnering in the salvage operation would be required to review and render their business models “fit for purpose.” A three-layered banking ecosystem in the EU should thus emerge one serving large corporates across the EU and also abroad, a second serving particular geographies and industries, and a third one more focused on retail clients and communities. Given the EU's openness and size, the region should host several banks of global standing and reach. The COVID-19 crisis is also an opportune time to enhance EU capital markets as a complement to the banking sector, especially with London's departure as a European financial center. The necessity of this project has been stated by many; COVID-19 has made it imperative to act. If this “New EU Banking Deal” deal does not materialize, the EU saga will include one more lost opportunity. More importantly, the consequences for both the banking sector and the entire EU financial and economic systems risk being dire. EU and banking authorities will have added to the costs of the economic and health catastrophes unfolding in front of us. Effective EU governance has never been more necessary in the face of major global issues such as COVID-19, climate change, and North-South migration. Now is the time for EU nations and their leaders in the public and private sectors to agree to a more robust financial union serving the EU population and its corporations. In doing so, the EU leadership will have met the growing concerns of an impatient EU public querying the purpose and value of the EU project.