Fragmentation is keeping European banks from reaching the scale needed to fund the bloc’s digital, economic-security and defence goals, EBA chair François-Louis Michaud told Reuters. He said cross-border lending and integration matter alongside mergers.
Michaud said differences in national tax, insolvency and consumer-protection rules make standardised banking products more costly and hinder economies of scale. He also said European institutions’ wholesale banking has dwindled over time, while non-bank financial institutions, private-credit firms and players outside the bloc provide a growing share of funding.
The European Commission is seeking to mobilise investment for digitalisation, defence and economic security, and exploring ways to ease cross-border banking. Michaud said momentum was building to simplify European rules, including the capital regime, while preserving resilience. He also cited US banks’ capacity to expand and some lenders’ moves into new markets.
