Speakers
Objectives
Over the past two years, the profitability of EU banks has improved significantly. The average return on equity now exceeds 10%, a level not seen in over a decade. Yet, this positive trend conceals deeper structural weaknesses. EU banks remain less profitable and less efficient than their global peers, particularly those in the United States. They also operate in a fragmented regulatory environment that limits their ability to scale, innovate, and compete internationally.EU cross-border banking groups still face significant obstacles to the free movement of capital, liquidity, and internal loss-absorbing capacity. The absence of a European Deposit Insurance Scheme (EDIS), combined with continued ring-fencing by national authorities, continues to fragment the single market for banking services.Improving the competitiveness of the EU banking sector will likely require a two-pronged strategy. First, structural reforms are needed to reduce fragmentation and complexity, foster cross-border mergers, and enhance economies of scale. Second, a renewed political commitment – potentially linking EDIS, intra-group financial mobility, and mutual support mechanisms – may be essential to unlock a more resilient and competitive European banking system.This session aims to identify the structural and regulatory drivers behind the persistent competitiveness gap between EU banks and their global peers, despite recent profitability improvements. Participants will examine how fragmentation, limited consolidation, cost structures, and regulatory asymmetries affect performance.
Points of discussion
- What explains the persistent profitability gap between European banks and their international competitors, despite recent improvements?
- What concrete steps and policy priorities could help strengthen the international competitiveness of EU banks?