Regulatory Easing Could Unlock €2 Trillion in Lending for European Banks
Potential Impact of Simplified Banking Regulations in Europe
Current Regulatory Landscape and Calls for Change
MADRID, June 19 (Reuters) - Europe's banking sector could boost lending by more than €2 trillion ($2.2 trillion) if regulators were to simplify rules while maintaining financial resilience, the head of Spanish banking association AEB, Alejandra Kindelan, said on Friday.
Regulators globally are weighing easing the burden on banks to support competitiveness and economic growth, though European banks have been primed not to expect major changes after the European Central Bank earlier proposed streamlining rules without easing overall capital requirements.
Spanish Banking Groups Advocate for Competitiveness
Spanish banking groups on Wednesday had urged policymakers to prioritise competitiveness alongside stability.
Upcoming European Commission Assessment
A European Commission assessment of banking sector competitiveness is expected in July, with legislative proposals likely to follow in 2027.
Barriers and Proposals for Regulatory Simplification
Removing Barriers to Cross-Border Banking
The FT, citing a draft European Commission report, reported on Friday that the EU was set to remove barriers preventing banks from moving funds across the bloc.
Joint Report Highlights Regulatory Complexity
A joint report by Spanish banking associations AEB, CECA and UNACC flagged that regulatory complexity and overlapping capital requirements were constraining banks' ability to finance growth, despite the sector's strong capital and profitability levels.
Proposed Measures for Streamlining
The proposals include streamlining capital frameworks, improving coordination among supervisors and reducing fragmentation across the European Union, positing that such measures would enhance efficiency without weakening safeguards.
Estimated Economic Benefits
The groups estimated that simplification could increase lending capacity by over €2 trillion, including around €250 billion in Spain alone, and lift euro zone GDP by 2.7%, significantly above the average growth seen over the past two decades.
Recent Developments and Industry Response
European Banking Authority's Targeted Proposals
Earlier this week, the European Banking Authority set out what it called "targeted" and "balanced" proposals to simplify the bank capital framework without weakening the sector's resilience.
Industry Calls for Simpler Rules Amid Investment Gap
Europe's banks last week also urged simpler rules to help them finance growth after saying that Europe faced a widening €1.4 trillion ($1.62 trillion) annual investment gap.
(Reporting by Jesús Aguado, editing by Victoria Waldersee and Andrei Khalip )
