Europe must not lose any more time on banking regulation reform

The Association of German Banks (BdB) welcomes the European Commission’s decision to review banking regulation. At the same time, CEO Heiner Herkenhoff warned against further delays and called for concrete measures to be implemented much more quickly to strengthen the competitiveness of Europe’s banks. The European Commission is due to publish its report on banking regulation and the competitiveness of institutions on 17 July.

“Europe needs strong banks to finance the vast investments required in digitalisation, energy, defence and the industrial transformation. The competitiveness of today’s banks must not become a casualty of political compromise,” Herkenhoff said. 

From the Association of German Banks’ perspective, there is a risk that the reform of banking regulation will be delayed even further under the Commission’s proposed timetable. Following publication of the report, the legislative process is not expected to begin until spring 2027. This would leave Europe having lost much of 2025 and 2026 – at a time when other major economies, including the US and the UK, are already adapting and streamlining their regulatory frameworks for banks.

The Association of German Banks also strongly cautioned against linking regulatory relief measures to progress on the European Deposit Insurance Scheme (EDIS). “Regulatory relief should be implemented swiftly and independently of any progress on EDIS. Only then can the competitiveness of the banking sector be strengthened effectively and the full potential of the planned reforms be realised. Decoupling these two issues would create the conditions for swift action and help strengthen Europe’s position as a financial centre over the long term.”

According to a recent study by Oliver Wyman, commissioned by the European Banking Federation, Europe’s additional investment needs over the next five years will amount to approximately 1.4 trillion euros – per year. “Without strong banks and efficient capital markets, Europe will not be able to deliver sustainable improvements in growth, resilience and strategic autonomy”, said Herkenhoff.