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Exchange of views: What ambitions for the EU banking sector and related policy priorities?

Day 2 Afternoon

Thursday 12 September

Room :

Fennia II - Exchange of views

Speakers

Introductory remark
Andrea Enria - Chair of the Supervisory Board, SSM, ECB
Chair
Felix Hufeld - President, BaFin
Public Authorities
Alessandro Rivera - Director General of the Treasury, Ministry of Economy and Finance, Italy
Carlos San Basilio - Secretary General of the Treasury and International Financing, Ministry of Economy and Business, Spain
Industry Representative
Xavier Musca - Deputy Chief Executive Officer, Crédit Agricole S.A.

Objectives of the session

In the five years since the banking union was launched, there has been a marked improvement in the banking sector. Banks have strengthened their balance sheets.

However, the European market remains segmented along national lines, the “doom sovereign-bank loop” has not disappeared and in certain countries like Italy, Portugal, Spain has increased. Euro area banks’ return on equity (ROE) at around 6% remains below that of some of their international peers, for instance US banks at a time when technological innovation requires significant investment. The low price-to-book ratios reflect this chronically low profitability of EU banks. The dispersion in the holdings of non-performing loans (NPLs) is also disquieting: Indeed, the amounts that are still not sufficiently provisioned are considerable especially in some countries.

Looking ahead, a looming competitive threat to banks comes in the form of the big techs, which do have the potential to fundamentally redefine financial intermediation: they have strong brand recognition, a worldwide customer base and privileged access to cutting-edge technologies.

The objective of this exchange of views is to discuss the main necessary ambitions for the EU Banking sector over the next 5 years. The discussion will focus on the key policy priorities for increasing the efficiency and the competitiveness of the EU banking sector and facilitating its adaptation to the new challenges (digitalization, climate change etc…). The speakers will also be invited to express their views on necessary EU initiatives to address the deepening of the fragmentation of the EU banking market.

Points of discussion

What are the current weaknesses of the EU banking sector and their main consequences for the EU economies? What should be the main ambitions for the banking system by 2024?

What are the EU key policy-actions required to improve the competitiveness and the efficiency of the European banking sector?