The chairmen and CEOs of Europe's largest banks, led by Santander's executive chairman Ana Botín, called on Thursday on European institutions to temporarily halt new capital requirement increases and reduce regulatory barriers, arguing that banks need greater capacity to finance investment and accelerate economic growth. In a letter addressed to the President of the European Council, António Costa, the President of the European Commission, Ursula von der Leyen, the President of the European Parliament, Roberta Metsola, and the President of the European Central Bank, Christine Lagarde, the bankers say that Europe is simultaneously facing a period of low growth, geopolitical instability, energy challenges and the need to strengthen defence and compete with the United States and China in critical technologies.
The signatories point to the European Union's strategic investment needs of 1.2 trillion euros per year, according to an estimate presented by Mario Draghi. Banks currently finance around 75% of economic activity, so the bankers consider that bank lending to the private sector will need to grow by around 5% per year, more than double the pace recorded before the pandemic. The first demand is an immediate and temporary moratorium on new increases in capital requirements, both regulatory and supervisory, until long-term reforms are implemented. European banks currently have around 2.5 trillion euros in loss-absorbing capacity, a figure the signatories say is at historical highs.
The second demand is for permanent simplification of regulation and greater integration of the European banking system. The bankers are asking the European Commission to present, by early 2027, two separate legislative packages: one dedicated to simplification and another to integration. They argue that supervisors should also consider competitiveness and economic growth, and that national barriers that fragment the single market and hinder European banks from achieving scale should be eliminated.
The bankers reject that the proposals imply a weakening of financial stability, arguing that the European banking system is today stronger and more resilient to shocks. "We do not want to weaken the safeguards that underpin financial stability," they state. In addition to Ana Botín, the letter was signed by the heads of HSBC, UBS, Crédit Agricole, Société Générale, BNP Paribas, BPCE (owner of Novo Banco), ING, Deutsche Bank, Barclays and Standard Chartered.
