EU wants bigger banks to rival US lenders

The European Union must have bigger banks if the 27-nation bloc wants to catch up with rivals in the United States, Brussels said Friday.

The EU published a report looking at the banking sector as part of its efforts to boost the European economy by unlocking more money for different industries.

Brussels said it wanted to ease rules for the European banking sector including lower capital requirements.


In the aftermath of the financial crisis of 2007-2008, a top international banking supervisory authority -- known as the Basel Committee -- set new global standards to ensure banking system stability.

But European banks have long criticised the EU's overzealous application of the rules, which they say put them at a disadvantage compared to foreign banks since they had the rules on top of national regulations.

The banks argued this hindered their ability to finance the European economy.

US regulators also proposed loosening some capital rules earlier this year.

A senior European official said the EU did not want to weaken the rules, but wanted to apply them "in a way that optimises the benefits for the EU economy".

"European banks need the opportunity to scale up in their domestic market like the US have," the official said.

NGO Finance Watch said the EU had the "right diagnosis, wrong remedy".

"Cutting capital requirements would give banks one-time room on their balance sheets. But this does not mean more productive investment in the economy, it means undermining banks' lending capacity in the future," Julia Symon of Finance Watch said in a statement.

EU financial services commissioner Maria Luis Albuquerque told journalists the European banking sector was "still too fragmented across national lines", which "prevents banks from reaching the scale needed to compete globally".

The report appeared to criticise German objections this year to Italian lender UniCredit's hostile takeover of Commerzbank.

"Unjustified interventions at the national level too often hinder the ability of EU banks to consolidate," the EU said without naming any country.

"As a result, those banks are prevented from scaling up at the EU level."

The EU executive will propose new banking rules in the first half of 2027.