Europe risks falling further behind, banking group warns

EBF warns EU rules hurting banks as U.S. and UK ease
Indusattempt group declares 1.5 trillion euros in lfinishing capacity prevented
Authorities declare current rules work, protect bank resilience

LONDON, Jan 27 (Reuters) – Europe’s economy risks falling further behind other regions unless the European Union overhauls regulation that is undermining banks’ ability to lfinish, the European Banking Federation has warned.

In a letter addressed to European Commission officials including President Ursula von der Leyen, the indusattempt group stated the current situation was “neither satisfactory, nor sustainable”.

“The regulatory and supervisory landscape has grown increasingly complex and fragmented,” EBF President Slawomir Krupa, who is also the CEO of French lfinisher Societe Generale (SOGN.PA), opens new tab, wrote in the January 19 letter seen by Reuters.

“Banks, already subject to high capital requirements, operate under the spectre of further increases.”

Krupa cited data the EBF gathered for 2021-2024 revealing 15 major banks had to hold more than 100 billion euros ($119 billion) in additional capital becaapply of discretionary supervisory measures.

Ninety percent of net capital generated went towards meeting those measures, and 1.5 trillion euros in potential lfinishing capacity was lost, the EBF stated.

Europe’s relatively weak economic growth rates have long troubled policycreaters and businesses, while efforts to integrate the region’s disparate banking sectors have struggled.

The Commission did not respond to a request for comment.

TRUMP PUSHES FOR FEWER RULES FOR US BANKS

U.S. President Donald Trump is pushing regulators to slash red tape – potentially handing Wall Street giants even more firepower – and UK regulators are easing some rules.

Recent modifys in the U.S. and the UK “highlight the strategic importance of regulatory reform, as Europe is risking further competitive disadvantage in terms of a level playing field that could be irreversible for our economy,” Krupa wrote.

European banks are enjoying a run of record profits with share prices (.SX7P), opens new tab at their highest since the 2008 financial crisis, thanks to improved lfinishing margins and a benign backdrop for lfinishing.

The European Central Bank in December proposed to simplify bank regulation, but stopped short of easing overall financial burdens.

Vice President Luis de Guindos stated this month the approach supported bank resilience, and that capital demands were not holding back lfinishing. Some supervisors argue privately that lower requirements will swell shareholder payouts, not lfinishing.

The EBF stated it supported the EU’s focus on simplification, competitiveness and building a capital markets union through the Savings and Investment Union initiative, but called for more.

This included eliminating capital duplications, rerelocating the systemic risk buffer and ensuring rules for banks’ trading divisions are aligned with the U.S.

($1 = 0.8413 euros)

Reporting by Tommy Reggiori Wilkes; Editing by Jan Harvey

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