London, 27 January 2026 — Europe’s economic growth risks lagging behind other regions unless the European Union (EU) reforms regulatory frameworks that are currently hampering banks’ lending capabilities, the European Banking Federation (EBF) has warned.
Sławomir Krupa, President of the EBF and Chief Executive Officer of France’s Société Générale, cautioned that the existing supervisory and regulatory structure has grown increasingly complex and fragmented. In a letter dated 19 January addressed to European Commission President Ursula von der Leyen and other senior officials, Krupa stated: “The current situation is neither satisfactory nor sustainable.”
Krupa highlighted that banks are operating under stringent capital requirements while simultaneously facing pressure to expand lending. According to EBF data covering 2021–2024, 15 major European banks have been compelled to hold over €100 billion in additional capital due to enhanced supervisory conditions.
The EBF provided the following figures illustrating the impact of these regulatory pressures:
| Metric | Statistic |
|---|---|
| Additional capital required | > €100 billion |
| Utilisation of net capital | 90% to meet supervisory requirements |
| Potential lost lending capacity | €1.5 trillion |
For years, subdued economic growth across Europe has been a concern for both businesses and policymakers. Attempts to streamline the fragmented banking sector have repeatedly stalled. A European Commission spokesperson emphasised that regulatory simplification is a “top priority”, and certain measures have already been introduced. However, responsibility for simplification does not rest solely with the Commission; the European Parliament, national governments, and supervisory authorities all play critical roles.
International developments are also amplifying the warning signals. In the United States, President Donald Trump has pushed for lighter banking regulations, while the United Kingdom has already relaxed certain rules. Krupa noted, “This environment risks placing Europe at a competitive disadvantage.”
In December, the European Central Bank (ECB) proposed measures to simplify banking regulations, though progress in reducing overall capital requirements has been limited. Vice-President Luis de Guindos asserted, “Capital demands are not currently obstructing lending.”
The EBF further suggested that Europe could consider additional measures, such as reconfiguring capital buffers, removing systemic risk surcharges, and aligning trading regulations more closely with those of the United States.
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