The European Commissioner for Financial Services, Maria Luís Albuquerque, announced on 10 September that the European Commission will present in the first quarter of 2027 a comprehensive legislative package to simplify the prudential framework for banks, reduce fragmentation of the single market and adapt the implementation of international standards to the specifics of the EU economy. The announcement was made before the Committee on Economic and Monetary Affairs of the European Parliament, in Strasbourg.
The Report on the Competitiveness of the EU Banking Sector, published on 17 July, identifies three major obstacles to the competitiveness of European financial institutions. The first is fragmentation, given that cross-border banking activity in the EU remains limited, requiring progress on the Banking Union, including a European deposit insurance system. The second relates to the need to better adapt the application of international standards to the specifics of the European economy. The third challenge is the excessive complexity of the prudential framework, which requires simplification for all banks and greater proportionality for smaller, lower-risk institutions.
The report emphasizes that banks are essential to the EU economy, being the main source of financing for households and businesses, including small and medium-sized enterprises, and playing a fundamental role in financing strategic sectors. European institutions are today more resilient, better capitalized, more liquid and sustainably profitable than before 2008, having withstood the pandemic, energy shocks, the international banking turbulence of March 2023 and geopolitical tensions. However, the Commission warns that resilience is not enough to ensure that EU banks remain competitive.
The commissioner also revealed that the EU intends to achieve political agreements by the end of this year on the Market Integration and Supervision Package, complementary pensions and securitization. In the case of the review of the Sustainable Finance Disclosure Regulation, the proposal aims to make the rules simpler and strengthen the credibility of the regime against greenwashing. Albuquerque called for sustained political determination, recalling that many barriers to a true European banking system are deeply rooted and that success will be measured by what works in practice.
