EU Plans Banking Reforms To Support Cross-Border Mergers, Strengthen Global Competitiveness

The European Commission has proposed measures to remove barriers to cross-border banking and help European Union banks expand to compete with larger US lenders.

In a report released on Friday, the Commission said national restrictions and political intervention in cross-border mergers have limited the growth of banks across the bloc, leaving many institutions large only within their domestic markets. The proposals include reducing obstacles to banking mergers across member states and allowing banking groups to meet more of their capital and liquidity requirements at the parent company level instead of individual subsidiaries. The Commission estimates that easing these requirements could release around 230 billion euros in liquid assets.

The report also proposes replacing its earlier plan for a European deposit insurance scheme with new measures focused on deposit insurance. Banking industry groups welcomed parts of the proposals but called for further regulatory coordination and changes to capital rules to improve the competitiveness of EU banks.