EBF head calls for EU banking regulation reform to compete with US

The head of the European Banking Federation (EBF) has called for a more “dynamic” set of banking regulations in the bloc so that the sector can compete with US peers.

The EBF represents 32 national banking associations in the EU and EFTA

Reuters reports that EBF head Ana Botín has said that for European banks to improve profitability and catch up with US rivals, regulations must be “proportionate, flexible and dynamic”.

Such regulatory reform is the route to high standards and growth, she adds.

She cites the fact that banks in Europe have been slower to overcome problems following the financial crisis a decade ago and the European banking industry remains fragmented.

Botín, who is also executive chairman of Spanish bank Santander, told an EBF summit on Thursday: “If we don’t get the balance right, we will not get the investment in the European economy all of us here want.”

Banking capital buffers in Europe have been much tougher than in the United States, where banks are more easily able to capitalise on the US domestic market of more than 300 million people.

Despite the European Central Bank (ECB) becoming supervisor supreme for the main eurozone banks in 2014, banking in the bloc remains fragmented with cross-border deposit transfers, for instance, not allowed.

A truly single market for European banking was needed and “crucially important”, Botín says, with a full-scale banking union and agreement on a common deposit guarantee insurance scheme in the pipeline.

“Profitability is the first line of defence and we do need to see further progress in European banking market integration,” Botín adds.

“Overall, we should ask ourselves why we have lower profitability than banks in the United States, where new rules are adapted more quickly, with more developed capital markets, with a single much larger market than we have.”