Enviro News Asia, Brussels – The European Commission has adopted a new Communication outlining measures to strengthen the competitiveness of the European Union’s banking sector by promoting market integration, simplifying regulations, and improving banks’ ability to finance economic growth and strategic investments.
European Commission President Ursula von der Leyen said a stronger and more competitive banking sector is essential to advancing the EU’s Savings and Investments Union (SIU), which aims to mobilize capital for innovation, the clean energy transition, defense, and sustainable economic development while maintaining financial stability.
The Commission said the initiative seeks to build a more integrated and efficient banking market capable of providing better financial services to households and businesses while creating a balanced regulatory framework that encourages prudent risk-taking and preserves resilience.
Following consultations with member states, financial institutions, and supervisory authorities, the Commission identified three major challenges facing the sector. These include the fragmentation of banking markets along national borders, the implementation of international Basel III banking standards that do not always reflect the specific characteristics of the EU banking system, and a complex regulatory framework that creates unnecessary administrative burdens.
To address these challenges, the Commission proposed measures to remove barriers to cross-border banking activities and strengthen the Single Market. The plan includes allowing cross-border banking groups to allocate capital and liquidity more efficiently across EU member states while safeguarding financial stability and maintaining support for local economies.
The Commission also intends to strengthen common financial safeguards by proposing a simpler and more effective deposit protection mechanism within the Banking Union, replacing the previous European Deposit Insurance Scheme proposal. Additional efforts will focus on closer monitoring of anti-money laundering and consumer protection frameworks to facilitate cross-border banking services.
The Communication reaffirms the EU’s commitment to implementing international banking standards while considering the specific needs of European banks. The Commission will review aspects of the Basel III framework that may limit lending capacity and consider adjustments to prudential and corporate governance rules to better reflect differences in bank size, business models, and operational activities.
As part of its broader regulatory simplification agenda, the Commission also plans to streamline capital requirements, harmonize macroprudential buffers, simplify bank resolution rules, and revise the criteria for small and non-complex financial institutions to reduce compliance costs.
The European Commission plans to present a legislative package in the first quarter of 2027 to amend the EU banking regulatory framework in line with the objectives of the “One Europe, One Market” roadmap. It also called on member states, supervisory authorities, and the banking industry to continue working together to strengthen the competitiveness of Europe’s banking sector. (*)
