While the European Commission brought the industry together in mid-September to begin preparing the future communication on the competitiveness of the European banking sector, scheduled for late 2025 or early 2026, the European Banking Federation (EBF) is expressing a number of expectations regarding the initiatives to be taken at European level to enable it to finance the economy more effectively and compete internationally.
In particular, the organisation points the finger at the excessive level of prudential capital requirements. It criticises the fact that, at European and national level, banking supervisors tend to require capital add-ons to cover risks which, in its view, are already covered by legislation (level 1). These additional requirements would take up nearly 80% of their increased capacity to lend to the real economy and would penalise the competitiveness of European industry.
The EBF stresses the urgent need for the European Union to “align” its supervisory practices with international standards and to ensure capital requirements that are “proportionate, risk-based and clearly justified”, in a document setting out its ideas for boosting the sector’s competitiveness.
The organisation is also calling for a review of the purpose of European financial legislation. It should capture an ecosystem rather than individual financial institutions. It should be based more on general principles, while the implementing measures (levels 2 and 3), which are fewer in number, should better reflect the main objectives. As for the ECB, acting as the single banking supervisor, and the European financial supervisory authorities (EBA, ESMA and EIOPA), their remit should also include “competitiveness and growth” and ensuring that supervisors do not add prudential requirements by transposing EU law.
Whether it is a question of banking legislation or financial regulation, the EBF is calling for an assessment of the extent to which certain legislative texts overlap and impose the same rules several times over, particularly in terms of reporting obligations. For example, it wants to be exempted from cyber resilience legislation so that the ‘DORA’ regulation governing IT risk management becomes the lex specialis for the banking sector.
See the EBF recommendations: https://aeur.eu/f/inw (Original version in French by Mathieu Bion)