This paper investigates whether and how ownership concentration, as internal mechanism of corporate governance, and market competition, as external mechanism of corporate governance, interact to influence bank performance. In other words, we test whether ownership concentration and competition are complementary or substitutes. While the separate effect of ownership concentration and competition on bank performance is well established in the literature, the interaction effect of these internal and external mechanisms on bank performance has received a little attention. Using a unique hand-collected database covering commercial banks based in 16 Western European countries from 2004 to 2012, we find that banks with concentrated ownership exhibit less profitability when operating in less competitive markets. Our results indicate that in the banking industry, ownership concentration and market competition seem to be complementary disciplining mechanisms of corporate governance. Therefore, banks may benefit differently from ownership concentration, as disciplining mechanism to monitor managers and enhance performance, depending on the level of market competition. Regarding the independent effect of ownership concentration and market competition on bank performance, consistently with previous studies, we find that ownership concentration and market concentration impact positively bank performance.