Interview with Expansión

Interview with Sharon Donnery, Member of the Supervisory Board of the ECB, conducted by Andrés Stumpf on 6 May 2026

11 May 2026

Everyone is now talking about banking competitiveness. What exactly does this concept mean for the ECB?

It is, without doubt, one of today’s hot topics. At the ECB we recognise that the competitiveness of the economy is a vital issue. As far as the banking sector is concerned, we believe that it is broadly resilient. This resilience was hard-earned following the global financial crisis, and has seen us through some very challenging years. It should therefore be protected, since having safe banks that are able to navigate the ups and downs of the economic cycle is, in and of itself, a source of competitiveness and a competitive advantage for the European economy.

On what specific points do you think the rules have become overly complex, and where is there room for improvement?

We have identified undue complexity at various levels. First, as a result of fragmentation or the failure to complete the banking union. The Draghi Report has already recognised that the Internal Market remains incomplete, and the same can be said of the banking union. We still see many rules at national level and directives that are transposed differently from country to country. Harmonisation is one area with plenty of scope for change. We also see complexity in the capital structure, owing to the number of buffers and how they operate. Moreover, we believe there is room to streamline the reporting framework and to be more efficient as supervisors, ensuring that banks remain robust in a still uncertain world.

The ECB has made the case for a “single jurisdiction” in Europe for the banking sector. What might this mean for banks, firms and individuals?

Although the Single Supervisory Mechanism (SSM) has been up and running for a decade now, around 80% of banks’ loan portfolios are still national, with cross-border deposits accounting for only 2%. In a more integrated market, individuals and firms would have more choice and potentially more favourable interest rates. From a competitiveness standpoint, European banks lack scale and scalability, particularly in a digital world in which banks need to invest heavily. A cross-border banking approach would enable some banks to gain size and scale.

Some fear that competition could be jeopardised if banks get too big.

The banking sector needs banks of varying sizes and with different business models. It’s a key factor for competition and, as supervisors, we are not here to force banks in one direction or another. But if we want an integrated market and a banking union that complements the Single Market, we need cross-border banking, and that means that, for some banks, greater scale would be advantageous.

We've been talking about completing the banking union for a decade now, to no avail. What makes you think this time could be different?

It is admittedly frustrating that the debates have dragged on for so long, but we have made significant progress. The Single Supervisory Mechanism and the Single Resolution Board are cases in point, and both are running smoothly. The current debate on competitiveness represents an opportunity to take a fresh look at issues such as the European Deposit Insurance Scheme and the single jurisdiction. Rather than approaching these issues individually, this debate enables us to set out a more strategic roadmap. Europe needs to make headway on all fronts simultaneously.

Would you accept a “two-speed” banking union if countries don’t manage to move forward in unanimity?

It would be a challenge, given that we have a Single Rulebook and a Single Supervisory Mechanism. We’ve been in lockstep with everything we’ve done until now. It’s hard to imagine how different arrangements for different banks would work under a single supervisor, especially since one of European banking supervision’s great strengths has been a level playing field for the 111 largest banks that we supervise directly.

Some politicians are blocking cross-border mergers on national grounds while, in Brussels, they are calling for a banking union. What’s your assessment of that?

These are political views. From our perspective as supervisors for the entire euro area, when we assess potential mergers we focus on the business model: how the bank will be run, if the consolidated bank will have a solid business model, good governance, etc. We focus on the euro area as an integrated whole rather than on any national dimension. Given the need to invest in digitalisation, consolidation or mergers can make a lot of business sense, even if they provoke misgivings in certain regions.

The European banking sector complains about being at a regulatory disadvantage compared with the United States. Is this why it has lost market share in areas like investment banking?

I don’t think that is the fairest way to analyse the situation. According to a study we published recently, if certain factors are taken into consideration to ensure a like-for-like comparison, euro area and US banks have comparable capital requirements. In fact, if we were to apply the current US rules to our largest banks, their capital requirements would increase.

The issue is more one of scale and the ability to offer a wide range of products across multiple jurisdictions. I also do not believe that regulation is the reason behind the lower investment in innovation and technology that we are seeing in Europe, so weakening supervision is not the answer.

So you don’t support the industry’s call for lower capital buffers?

The ECB has been very clear on this – our priority is preserving the current level of resilience and adhering to international standards. That said, our response to the European Commission’s consultation makes it clear that there is room for constructive changes that remove unnecessary complexity.

What is your opinion on the ECB being given a “second mandate” that includes competitiveness? That’s another of the sector’s major demands.

Financial stability is a prerequisite for a healthy economy. In Europe we still bear the scars of the last crisis as a reminder. Personally, I am not in favour. Based on my past experience, such as at the Central Bank of Ireland, having a mandate to promote the financial sector can blur objectives and become a distraction. The focus of the ECB should continue to be on price stability and financial stability, including the safety of the banking sector. That is what actually contributes to competitiveness.

You mentioned that the banking sector is resilient, but new risks are emerging, such as private credit, AI and geopolitical tensions. How do you factor those into your supervision?

We must not be complacent. Geopolitical risk is already one of our main areas of focus – we are currently conducting a reverse stress test, the outcome of which we will see in the summer. We don’t see these as new risks in and of themselves, but rather as factors that materialise in the form of credit or liquidity risks. As for AI, it does present risks, but it also offers banks significant opportunities to modernise their infrastructure and offer better services.

What is your assessment of the Spanish banking system in particular?

Spanish banks, like many others in the euro area, have come a long way since the financial crisis and remain broadly resilient. Even though we do monitor local or market-specific issues – such as the asymmetric impact of the energy shock in Spain and Portugal compared with other countries – our supervision is not organised along national lines. Rather, it is based on understanding how economic problems affect the credit or liquidity risk profile of each bank, according to its business model.