Interview with MLex

Interview with Patrick Montagner, Member of the Supervisory Board of the ECB, conducted by Fanny Roux on 3 February 2026

10 February 2026

To frame the discussion on competitiveness, how would you characterise the competitiveness of the European banking sector?

For us, the competitiveness of the banking sector comes from its resilience, that is, its capacity to support and continue providing services to the rest of the economy and avoid the stresses resulting from losses and economic and other uncertainties. Reducing or stopping services can increase the cyclicality of crises. We saw that in 2008 during the great financial crisis, and we don’t want to see it again. The more confident banks are in their capitalisation and resilience, the less they feel compelled to restrict their services.

The banking sector would like to “embed competitiveness and growth objectives” into the mandates of the European Supervisory Authorities and the Single Supervisory Mechanism. Do you think that would be relevant?

I don’t see how adding something which is not well defined would bring more clarity for all the external stakeholders, including banks, depositors, investors and even the European Parliament to which we are accountable. Economic growth does not come from banking regulation but rather from the labour market, incentives for investment, innovation and the absence of oligopolies stifling innovation or competition.

Some banking representatives told MLex that combining lower capital requirements with a lending conditionality could be a good way to ensure that extra capital is also used to boost additional lending and not only on dividends. Do you think having this kind of mechanism would be a good idea?

I wouldn't say that setting capital against less dividends or more loans is good bargaining. Capital is not meant for that. We need capital because it's good for the resilience of the system. It is meant to ensure that banks are safe. Moreover, money is already flowing into the EU economy. There is no need for additional loans. The question of financing in the EU is more about efficiently circulating money across the bloc to ensure that funds are invested in sectors that promote business creation and innovation. As far as we understand from the various surveys we conduct with both lenders and borrowers, there is no restriction of credit in the EU. People are unable to borrow money because they would be unable to repay it, not because of prudential regulation. Our recently published bank lending survey^[1] shows that there has been a tightening effect, but it is not due to banking regulation.

When talking about its competitiveness, the European banking sector often argues that there is a lack of a level playing field with US banks, regarding the prudential framework. Is that a fair statement, in your opinion?

First of all, when we compare EU and US banks, we’re talking about global systemically important banks, or G-SIBs. Regional banks in the United States are not competing with local banks in Germany or the Baltic countries, for instance. Second, the regulations on mortgages, insolvency, tax regimes, etc. are very different in the two jurisdictions. So it is always difficult to compare. European banks’ remarks regarding the two jurisdictions are mainly focused on certain market activities, such as those covered by the Fundamental Review of the Trading Book, or FRTB. For these sub-activities, there may be certain competition issues between the largest G-SIBs that still need to be demonstrated in order to see how the situation could be resolved without compromising resilience. One also has to keep in mind that the FRTB is not only about capital requirements, but also reporting provisions.

How do you think you can get beyond this tense back and forth between supervisors and the banking sector on the need to lower capital requirements? How to make this debate go forward?

It is natural that, in the early stages of this debate on competitiveness in the banking sector, not everyone agrees on everything. The point of supervision is to convince banks that we are never arbitrary. Supervision is also a matter of daily work with the banks. Our daily task is to make judgements based on facts and to engage with banks in a normal cycle of discussion. We see a major push to spark a debate about the need for lower capital. We don't think that there is too much capital in the system. What we tell the banking sector is that lowering capital buffers is not the right way to improve their profitability. More than a decade after the establishment of European banking supervision, we are confident that we have created a strong supervisory system, although we have listened to criticisms that we were a bit too bureaucratic. Now we can try to streamline some processes, focus on the main risks and avoid dispersing attention on minor risks. We have tried to address the issues of daily supervision in our “Streamlining supervision, safeguarding resilience” report,^[2] which we are now implementing, such as a fast-track process for significant risk transfer securitisations. We have listened carefully to what the banking sector has said. This report is also intended to facilitate our daily interactions with banks, in order to avoid some of the undesirable effects of our previous processes.