ECON draft report on the competitiveness of the EU banking sector

The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a draft report (dated 10 September) and motion for a resolution on the competitiveness of the banking sector in the EU. The report welcomes the European Commission's (EC) July communication on "Competitiveness of the Banking Sector and the Single Market in Banking" but calls for ambitious legislative action to complete the Banking Union, remove unjustified national barriers to the single market and facilitate market-led cross-border consolidation.

Key proposals include:

• Broadening the mandates of the European Supervisory Authorities (ESAs) to include competitiveness and innovation as a formal secondary objective, without prejudice to their primary objective of financial stability.
• Simplifying the capital stack by reducing overlapping buffers and supervisory add-ons, and exploring a significantly simpler regime for small, non-systemic banks.
• Enhancing the small and medium-sized enterprise supporting factor and raising the threshold for qualifying exposures.
• Launching an omnibus legislative initiative to eliminate obsolete, duplicative or excessively burdensome provisions, and empowering the ESAs to challenge disproportionate national gold-plating.
• Encouraging banks to deploy AI in areas such as creditworthiness assessments, fraud prevention and risk management.
• Clarifying the interaction between the AI Act and sectoral financial services legislation and shaping the regulatory framework for digital assets and tokenisation to preserve the EU's role in global finance.

The EC's detailed package of proposed legislative reform is expected in Q1 2027.

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