Alejandra Kindelan, the director of the Spanish banking group AEB, stated on Friday that if authorities simplified regulations while preserving financial resilience, Europe’s banking industry could increase lending by more than €2 trillion ($2.2 trillion).
Banks’ capacity to finance expansion was being hampered by regulatory complexity and conflicting capital requirements, according to AEB and other associations, CECA, and UNACC.
They calculated that simplification might boost GDP growth in the euro zone and boost lending by almost €250 billion in Spain alone.
Global regulators are considering reducing the burden on banks to promote economic growth and competitiveness, but European banks are unlikely to anticipate significant changes following the European Central Bank’s earlier proposal to streamline regulations without lowering total capital requirements.
In July, the European Commission is scheduled to evaluate the competitiveness of the banking sector, and in 2027, legislative suggestions are anticipated.
The FT reported on Friday that the EU was going to remove obstacles that prevented banks from transferring money within the bloc, citing a draft report from the European Commission.
At a financial event in Madrid, Bank of Spain Governor Jose Luis Escriva stated that “removing barriers” that divide EU banking markets is essential to enabling cross-border integration and increasing lending.
However, this necessitates finishing the banking union with explicit protections to guarantee parent banks assist subsidiaries during difficult times, according to Escrivá.
Carlos Torres, the chairman of BBVA, and Hector Grisi, the CEO of Santander, issued a warning about the potential for inadequate investment and regulatory fragmentation to undermine Europe’s competitiveness.
The region runs the risk of falling behind without investment, especially in quickly developing fields like technology, energy, and defense,” Torres stated.
Last week, European banks expressed a growing €1.4 trillion ($1.62 trillion) yearly investment shortfall and called for more straightforward regulations to help them finance expansion.
