Key facts
- Europe's banking sector could boost lending by over €2 trillion with regulatory simplification.
- Spanish banking associations highlighted regulatory complexity as a constraint on financing growth.
- Proposals include streamlining capital frameworks and enhancing coordination among supervisors.
- The European Banking Authority has put forward proposals to simplify the bank capital framework.
- A widening €1.4 trillion annual investment gap in Europe was also noted.
Europe's banking sector could unlock more than €2 trillion in lending if regulators simplify rules while maintaining financial resilience, according to Alejandra Kindelan, head of the Spanish banking association AEB. This potential boost comes as global regulators consider easing burdens on banks to support economic growth, though European banks have been cautioned against expecting significant changes.
Spanish banking groups have urged policymakers to prioritize competitiveness alongside stability. A joint report by Spanish banking associations AEB, CECA, and UNACC highlighted that regulatory complexity and overlapping capital requirements are constraining banks' ability to finance growth, despite strong capital and profitability levels. The proposals include streamlining capital frameworks, improving coordination among supervisors, and reducing fragmentation across the European Union, with the aim of enhancing efficiency without weakening safeguards.
The groups estimated that such simplification could increase lending capacity by over €2 trillion, with around €250 billion for Spain alone, and lift euro zone GDP by 2.7%. Earlier this week, the European Banking Authority presented its own 'targeted' and 'balanced' proposals to simplify the bank capital framework. Last week, European banks also called for simpler rules to help finance growth, citing a widening €1.4 trillion annual investment gap in Europe.