EU banking policy and regulatory issues - Eurofi

Context

European banks fared the coronavirus (COVID-19) pandemic with stronger capital positions, higher liquidity buffers and better asset quality. This time European banks have been part of the solution, although these positive developments have been made possible also thanks to exceptional support measures from public authorities.

However, a negative impact from such a shock is eventually unavoidable provided that the public support is reaching limits while a stagflation risk is unfolding.

In addition, the fact remains that the European banking sector was already beset by structural weaknesses when the Covid crisis hits: persistent low profitability caused by excess capacity, lasting very low interest rates and low-cost efficiency has been driving bank valuations to historic lows.

Technology also opens the gates to further non-bank competition (such as from big tech firms), while at the same time providing scope to exploit new business opportunities.

Furthermore, banks also have to address the global emerging challenges posed by topics such as climate-related financial risks, cyber risk, and operational resilience.

Related regulatory challenges will add to those stemming from the implementation of the most recent additions to the banking regulatory standards – Basel III – launched in the wake of the 2008 financial crisis, which are expected to be implemented factoring in EU financing specificities.

Contributions to the policy debate

Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)

Key Eurofi
documents

Eurofi policy notes

Improving the EU bank crisis management framework for small and medium sized banks and D-SIBs - February 2022 new

The conditions to benefit in the EU from the diversity of banking models - September 2021

Banking fragmentation issues in the EU - September 2019

Session summaries

Improving the global competitiveness of the EU banking sector - Paris High Level Seminar - February 2022 new

Basel 3 implementation in the EU: key political stakes - Paris High Level Seminar - February 2022 new

Banking model diversity in the Banking Union: added value and challenges - Paris High Level Seminar - February 2022 new

EU banking crisis management framework: improvement priorities - Paris High Level Seminar - February 2022 new

Implementing Basel III in the EU: remaining challenges and timing - Ljubljana Financial Forum - September 2021

Improving the EU bank crisis management framework - Ljubljana Financial Forum - September 2021

Challenges for the EU banking sector in the Covid context - Lisbon Virtual Seminar - April 2021

Policy priorities for the EU banking sector - Lisbon Virtual Seminar - April 2021

How should Basel banking standards evolve now? - Lisbon Virtual Seminar - April 2021

Public and private
sector views

Public authority views

EU banking challenges

D. Beau - Banque de France - Challenges for the EU banking sector in the COVID context: no time for complacency - April 2021

P. Callesen - Danmarks Nationalbank - Back to markets - April 2021

J. M. Campa - European Banking Authority (EBA) - Regulatory completion and effective implementation - April 2021

L. Máximo dos Santos - Banco de Portugal - Unusual crisis, unusual measures, big challenges - April 2021

J. Fernández - Committee on Economic and Monetary Affairs, European Parliament - Time to complete the Banking Union for a strong recovery - April 2021

E. Fernandez-Bollo - European Central Bank (ECB) - How healthy is the European banking sector in the pandemic? - April 2021

L. Garicano - Committee on Economic and Monetary Affairs, European Parliament - To have bank mergers the priority must be to complete the Banking Union - April 2021

S. Raspiller - French Treasury, Ministry of the Economy, Finance and the Recovery Plan, France - The completion of the Banking Union should aim at improving the profitability and the competitiveness of EU banks - April 2021

B. Vasle - Bank of Slovenia - New and old challenges for European banks - April 2021

K. Wiedner - DG for Financial Stability, Financial Services and Capital Markets Union, European Commission - Addressing the fall-out of the Covid-19 pandemic on the financial system - April 2021

Implementing the Basel framework in Europe

A. P. Serra - Banco de Portugal - Building resilience of the EU banking system through regulation - April 2021

L. F. Signorini - Banca d’Italia - How should Basel banking standards evolve now? - April 2021

O. Karas - Committee on Economic and Monetary Affairs, European Parliament - Making financial markets work for the Future of Europe - April 2021

G. Haber - Oesterreichische Nationalbank - Lessons from the COVID-19 pandemic and how regulatory banking standards should evolve - April 2021

Industry views

EU banking challenges

S. Fernández de Lis - Banco Bilbao Vizcaya Argentaria (BBVA) - Public aid, level playing field and the role of banks - January 1970

P. Heim - La Banque Postale - Supporting proportionate regulation and hastening sustainable finance policies - April 2021

J. Lemierre - BNP Paribas - What are the priority measures that would enable the EU financial industry to contribute to a strong and rapid recovery in Europe? - April 2021

D. Lebot - Société Générale - Only strong European banks can limit future sudden stops - April 2021

F. Vicario - Bank of America Europe - A harmonised banking sector is essential for financing the EU’s twin transition - April 2021

A. Simões - Grupo Santander - Now is the time to be pan-European - April 2021

Dr. S. Simon - Deutsche Bank AG - The next five years – Europe to outline its blueprint for future generations - April 2021

Implementing the Basel framework in Europe

P. Bordenave - BNP Paribas - What are the policy mistakes to be avoided, to foster a stronger economic rebound in Europe? - April 2021

J. von Moltke - Deutsche Bank AG - European banks after Covid – Challenges and opportunities for the years ahead - April 2021

A. Aucoin - Crédit Agricole S.A. - We need to breathe - April 2021