The public consultation launched by the European Commission activates the financial industry, which calls for regulatory simplification, the completion of the Banking Union, and concrete measures to compete on a global scale.
The European Commission has launched a key public consultation on the competitiveness of the banking sector in the European Union, a process that has already mobilized the continent's main financial players. Among them, the Association for Financial Markets in Europe (AFME) has presented a forceful response in which it not only diagnoses the structural challenges of the system, but also demands concrete measures to ensure that banking can sustain economic growth and the EU's investment needs in the coming years.
The employers' association emphasizes that European banks remain central players as lenders, market intermediaries, and providers of risk management instruments for companies, investors, and public administrations. However, it warns that their capacity to play that role is conditioned by a complex regulatory environment and by competitive disadvantages compared to other jurisdictions.
“A solid and competitive banking sector is essential to achieve the EU’s strategic objectives,” states Adam Farkas, who insists that Europe needs to “move towards a fully operational Banking Union and a ‘streamlined and agile’ regulatory framework.” According to Farkas, it is not about deregulating, but about “boosting the single banking market and simplifying the regulatory framework.”
A public consultation with high expectations
The process opened by Brussels -which will serve as the basis for the competitiveness report planned for this summer- is perceived by the sector as a critical opportunity. Market sources indicate that there is a growing expectation that the consultation will not remain a theoretical exercise, but will lead to tangible legislative proposals.
From AFME, it is insisted that the result must translate into “real reforms” that allow European banking to compete on equal terms globally, while preserving financial stability. The organization recalls that the European economy depends to a greater extent on bank financing than other regions, which raises the systemic importance of the sector.
Fragmentation and regulatory excess: the main brakes
One of the clearest messages from the document is the urgency of completing the Banking Union. The current fragmentation, according to AFME, prevents the free circulation of capital and liquidity within banking groups, limits consolidation, and reduces the efficiency of the system.
Furthermore, the sector denounces the existence of duplicate and overlapping regulatory requirements that, in practice, erode competitiveness. The complexity of the framework - from level 1 legislation to technical guidelines - generates additional costs and hinders adaptation to an increasingly digital and globalized environment.
Basel, global competition and legislative review
Another of the critical points is the need to guarantee equal conditions compared to international competitors. AFME defends that standards such as Basel III must be applied coherently between jurisdictions, avoiding deviations that penalize European banks.
In this context, the association calls for a rigorous review of comparative regulatory frameworks and, if necessary, the modification of primary-level legislation to correct relevant divergences.
Digitalization and competitive pressure
The report also focuses on digital transformation. Although European banks are investing significantly, structural and regulatory factors limit the impact of these investments compared to large technology operators and international competitors.
For the sector, the key is to balance innovation and regulation without generating additional burdens that hinder competitiveness.
From consultation to action
The financial industry agrees on an essential point: the public consultation must be the starting point, not the end of the process. In line with the recent conclusions of the European Council, AFME urges that the Commission's future report be quickly translated into concrete legislative initiatives.
“The debate on competitiveness is not abstract,” say sources from the sector. “It is about ensuring that banks can finance infrastructure, support companies, and channel investment towards the digital and energy transition.”
As the process advances, AFME has reiterated its willingness to collaborate with European institutions. But the underlying message is clear: without regulatory simplification, greater integration, and international coherence, European banking runs the risk of being left behind in an increasingly competitive financial environment.