The European Commission’s leaked competitiveness package, set for official release in July, is quietly redrawing what EU bank supervision is expected to deliver.
The draft, reported by the Financial Times and Reuters on June 18, covers multiple tracks: capital relief on mortgages and loans to unrated companies, reforms to deposit insurance frameworks, a review of investment firm capital requirements, and a provision that would let smaller lenders reduce or exit exposure to Basel III international banking standards. EU banks have long argued that overlapping requirements from supervisors, resolution authorities, and national regulators compress their lending capacity — the standard “we are assessing the root cause” complaint repeated across dozens of public consultations.
The EBA’s June 16 simplification report covers related ground, but it’s not a concession to the industry. The agency said limited structural changes can support competitiveness and growth without weakening resilience. What the EBA rejected was the banking industry’s call for sweeping capital requirement revisions, recommending instead that the framework clarify what lenders have long described as excessively complicated and duplicative rules.
The competitive trigger isn’t new. U.S. regulators have moved more aggressively on deregulation, and the Commission’s June 4 FRTB adjustment already introduced a temporary capital multiplier to protect EU banks from disadvantage from U.S. implementation delays. A Basel III carve-out for smaller lenders is the next logical step in the same argument.
Draft legislation could arrive in 2027. Worth reading the July publication before your next capital planning cycle.
Rebecca Lauren