Presenting a new report on ways to boost competitiveness of the European banking sector, commissioned from consultancy firm Oliver Wyman, the European Banking Federation (EBF) aims to tackle several misconceptions which, in its view, distort the debate on European banks’ capacity to lend more to the economy.
Wim Mijs, Chief Executive Officer of the EBF, referred to the following “myths” addressed by the publication: - high levels of capital requirements do not limit banks’ capacity to grant loans [an argument put forward by supervisory authorities (see EUROPE 13787/19)]; - European banks would be subject to higher capital requirements if they operated in the United States; - there is no credit squeeze in Europe.
The banking industry believes it would be able to cover around 20% of the annual additional investment needs, estimated at around €1.4 trillion, “an amount greater than the annual GDP of the Netherlands”, according to Mr Mijs.
However, according to the Oliver Wyman report, under the regulatory framework currently in force, in order to reach that 20%, European banks would need an additional €150 billion in CET1 capital. Yet a 1% reduction in Common Equity Tier 1 (CET1) requirements alone would free up €95 billion in capital that could be used to underpin infrastructure investment.
European banks are not necessarily calling for a reduction in capital levels, which reached 16.2% at the end of 2025, such a level guaranteeing the soundness of the system. Admittedly, they cite the 11% CET1 capital figure recommended by the Bank of England for the British banking system.
Through the report, which reiterates certain recommendations made in September 2025 (see EUROPE 13719/20), the EBF prefers to focus its attention on regulatory simplification in order to avoid duplication and provide more medium-term visibility on supervisors’ requirements.
Gonzalo Gasós, banking supervision expert at the EBF, argued that in the United States there are only three bank capital reserves (‘buffers’), whereas there are seven in the EU.
A simpler and more coherent capital stack can support both resilience and lending capacity, the EBF indeed argues.
See the Oliver Wyman report: https://aeur.eu/f/m9e (Original version in French by Mathieu Bion)