With its communication on the competitiveness of the European banking sector, published on 17 July 2026, the European Commission has presented a comprehensive agenda to make the European banking market more efficient, integrated, and growth-oriented. The initiative is a key pillar of the Savings and Investments Union (SIU) and is intended to ensure that banks continue to play a central role in financing innovation, decarbonisation, digital transformation, and defense investments.
The Commission’s objective is to preserve the resilience of the financial system while improving the conditions for lending and investment. At the heart of the initiative is the question of how banks can make an even greater contribution to financing the European economy without compromising financial stability.
The European Commission’s Agenda
The Commission identifies three key challenges currently limiting the competitiveness of European banks:
- Fragmentation of the European banking market: National barriers continue to hinder banks’ cross-border activities. This prevents economies of scale, increases costs, and makes it more difficult for European institutions to compete with large international banks.
- Need for adjustments to Basel III implementation: While the EU remains committed to international regulatory standards, the Commission intends to ensure that future regulation better reflects the specific characteristics of the European financial system. This includes the prominent role of bank-based financing in Europe, as well as the differing business models of large and smaller institutions.
- Simplification of regulation and supervision: The Commission highlights complex reporting requirements, overlapping regulations, and inefficiencies in the interaction between supervisory and resolution frameworks. The objective is to create a simpler, more proportionate regulatory framework while increasing the level of automation.
Outlook
Although the agenda does not yet constitute a concrete legislative proposal, it sets out the strategic direction of European financial market policy for the coming years. The Commission makes it clear that it regards a more integrated and growth-oriented banking sector as a key prerequisite for Europe’s competitiveness. Specific regulatory measures are expected to be proposed in the first quarter of 2027. At that point, it will become clear whether the European Commission is truly committed to following through on its stated ambition to deliver meaningful reforms and regulatory simplification.