To boost the competitiveness of the European banking sector, the European Banking Authority (EBA) believes it is necessary to maintain the level of capital of banking institutions, deepen the internal market and simplify certain regulatory requirements, in its response to a specific European Commission consultation published on Saturday 18 April.
The European Authority notes that EU banks are resilient, with an average CET1 ratio of 15.8% at the end of 2024 (see EUROPE 13693/10), strengthened by the reforms implemented after the 2008 financial crisis. However, it points to a number of challenges facing the sector, such as geopolitical risks, exposure to non-bank financial institutions and digital transformation.
The EBA recommends deepening the European banking market to enable cross-border institutions to optimise their operations. However, it points out that any steps to improve capital and liquidity management at group level must be approached “with caution”, paying attention to the appropriate balance of home and host banking activities.
“These include ensuring that sufficient resources are accessible at the level of individual entities in stress situations, preserving the effectiveness of supervision and monitoring across jurisdictions, and maintaining consistency with resolution planning and crisis management arrangements”, says the European Authority.
Simplification. By developing a European reporting framework from 2021 onwards, the EBA believes it has already contributed to simplifying the prudential framework, an exercise that has reduced administrative costs by around 20%. And when it comes to reporting, small banks are only subject to a third of the requirements for large institutions.
However, the European Authority recognises that the development of European rules has led to a “proliferation” of reporting obligations, which calls for further simplification to make the rules more predictable and better coordinated between requesting entities at national and European level.
The Authority is finalising a consultation document to rationalise the requirements in this area.
Building on specific proposals made in October 2025 (see EUROPE 13722/10), the EBA more generally advocates “a structured approach” to regulatory simplification in the following areas: credit risk, governance and remuneration, environmental, social and governance (ESG) criteria, supervisory processes and resolution.
See the EBA document: https://aeur.eu/f/llx (Original version in French by Mathieu Bion)