Eleven of Europe’s largest banking groups have called on European Union institutions to halt further increases in capital requirements and accelerate regulatory simplification, intensifying pressure on policymakers to make the region’s banking system more competitive with the United States and Asia.
Senior executives representing Santander, HSBC, Barclays, Standard Chartered, UBS, Deutsche Bank, ING, Crédit Agricole, BNP Paribas, Société Générale and BPCE backed the initiative. The banks have urged European leaders to introduce a temporary moratorium on additional capital requirements while the regulatory framework is reviewed.
They are also calling for a legislative simplification package from the European Commission in 2027, faster progress towards banking union and the removal of national barriers that prevent financial institutions from operating at greater scale across the bloc. The proposals extend beyond individual regulations, with the executives also seeking greater consideration of competitiveness within the supervisory framework.
EUROPE CONFRONTS THE SCALE PROBLEM
The intervention comes amid a wider debate over whether European banking regulation has become too fragmented and complex. European banks operate across a single economic area but continue to face national differences in supervision, taxation, insolvency regimes and other requirements that can make cross-border expansion more difficult.
At the same time, their largest US competitors benefit from a deeper and more integrated domestic capital market. Bank executives argue that Europe requires stronger financial institutions capable of converting the region’s savings into investment in infrastructure, technology, defence and economic growth.
The issue has become more urgent as geopolitical instability, energy constraints and competition in strategic technologies increase Europe’s financing requirements. The banks contend that continually adding capital and regulatory requirements could restrict their capacity to provide that financing.
WHY IT MATTERS
The joint intervention is significant because it brings together executives from some of Europe’s largest banking institutions behind a common regulatory agenda. It also shifts the debate from individual rules towards the overall competitiveness of the European banking system.
Policymakers face a difficult balance. The stronger capital and supervisory framework developed after the global financial crisis has increased resilience across European banking. Weakening those safeguards could create new vulnerabilities. Yet excessive complexity and fragmented implementation can increase costs, discourage consolidation and make European banks less competitive internationally.
The emerging debate is therefore unlikely to be simply about deregulation. It is increasingly about whether Europe can simplify its framework while preserving financial stability - and whether regulators should explicitly consider the international competitiveness of the institutions they supervise.