Interview with Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union

20 November 2025

“Competitiveness” is one of the most frequent words mentioned by politicians lately. How do you see the EU banking sector’s position relative to its global peers? Do you think criticism about the regulatory environment for banks is justified?

European banks today are unquestionably stronger and more resilient than they were a decade ago. Their capital and liquidity positions have improved substantially, and this is a clear achievement of the regulatory and supervisory reforms undertaken since the financial crisis. That solidity is a European success story and is also essential for banks to be able to contribute to grow.

But resilience alone is not enough. When compared with their global peers, many European banks remain smaller, less profitable, and face higher compliance costs. They operate within a fragmented landscape that limits their capacity to scale, innovate, and compete on equal terms. This fragmentation has roots both in European and national legislation and practices.

Some criticism about the complexity of the regulatory environment is understandable. Simplification must now become a central priority – not to weaken prudential standards, but to ensure that rules are proportionate, predictable and consistent across borders. The same outcomes can be achieved with less friction, freeing up resources for lending, innovation and digital transformation. Completing the Banking Union and advancing the Capital Markets Union are key to overcoming this fragmentation. Together, they will allow capital and liquidity to flow more freely, broaden financing options and strengthen Europe’s financial ecosystem. That’s what the Savings and Investments Union is about.

Ultimately, competitiveness also requires scale. Europe would benefit from having large banks able to operate seamlessly across the Single Market and compete globally. Maintaining a healthy diversified banking model, with smaller banks focused on specific client needs, is equally important, as this combination of strength and diversity is what will allow our financial system to finance Europe’s priorities and reinforce our collective competitiveness.

The Commission vowed to radically lighten the regulatory load for businesses in Europe and the debate about the complexity of rules is in full swing. What do you hope to see for banks at the end of the process?

Our commitment to simplification is firm – and it will benefit everyone: banks, businesses and ultimately citizens. I hope to see a simpler, more proportionate rulebook that reduces duplication and overlaps, streamlines reporting and allows banks to devote more resources to financing the real economy – while fully preserving financial stability.

Real simplification also comes from integration. Completing the Banking Union and deepening the Single Market for financial services are key to removing fragmentation and achieving economies of scale. A unified supervisory and regulatory environment would not only lower compliance costs but also allow European banks to compete globally from a position of strength.

A good example of our drive for simplification is our first Omnibus proposal of February 2025. It brings important simplification to key areas of sustainability reporting while keeping on course with our Green Deal objectives. The proposal to reduce the scope of reporting companies under the Corporate Sustainability Reporting Directive by about 80% means requirements now focus on the largest companies, which are more likely to have the biggest environmental and social impact, while smaller companies will be able to report voluntarily under a proportionate reporting standard. The Taxonomy Disclosures Delegated Act also simplified the main key performance indicators of financial institutions, especially the Green Asset Ratio for banks.

The objective of simplification is a key consideration underpinning the Savings and Investments Union. And as mentioned in that strategy, in 2026 the Commission will issue a report assessing the situation of the banking sector in the Single Market, including EU banks’ competitiveness. Simplification will be one of the issues covered by it. In this respect, the input expected from the supervisory authorities such as the European Banking Authority, the ECB and the national supervisors will be an important contribution to this exercise.

How would you ensure that simplification does not compromise prudential standards and financial resilience?

Simplification does not mean weakening prudential standards. Financial stability remains the essential factor for everything we want to achieve – from deeper capital markets to greater competitiveness. Without stability, there can be no confidence, no investment, and ultimately no growth. The progress we have made since the financial crisis is a European achievement, and we will not compromise on it.

But we must also recognise that the regulatory architecture has grown dense over time – with overlapping requirements and sometimes unnecessary complexity. I often compare it to a house with strong foundations, but where extra walls and corridors have been added over the years. The structure is safe, but moving through it has become cumbersome. Simplification means opening up space, removing redundant partitions and improving the layout – without touching the foundations.

Our goal is to preserve resilience while streamlining execution. Rules should be clear, proportionate and consistent across the Single Market. To achieve that, we need better coordination among all authorities involved – supervisors, macroprudential bodies and resolution authorities – to avoid layering new requirements.

Without the right balance between efficiency and resilience, we risk losing the ability to compete, grow, and innovate — and ultimately, to preserve financial stability.

What about smaller banks? Is the proportionality principle fit for purpose, or could smaller banks be exempt from far-reaching rules?

Our current prudential framework already incorporates a strong element of proportionality. For example, the reporting burden on small and non-complex institutions represents only about 30% of the burden on larger banks. This differentiation works – but we can, and should, go further. The key is to make proportionality more effective and predictable, while maintaining a level playing field and consistent safeguards. What qualifies as “small” or “non-complex” can look very different across Member States, which is why any adjustments must remain grounded in common standards. And proportionality must go hand in hand with robust crisis-management and depositor-protection frameworks, to prevent destabilising “flight-to-safety” dynamics.

In short, proportionality is fit for purpose – but it can be refined, and we can look for alternatives elsewhere and learn from good examples. Simplifying proportionality for smaller institutions, while ensuring consistent supervision and safeguards across the Single Market, will help maintain both stability and diversity – the twin pillars of a strong and diverse European banking system.

One of the persistent challenges in Europe is the fragmentation of financial markets across national borders – something once compared to a “110% tariff”. What steps are you taking to break down these barriers and enable firms to benefit from a more connected European economy?

Fragmentation remains one of Europe’s major obstacles. The IMF’s estimate that barriers within the European Single Market are equivalent to a tariff of 110% on services is a powerful illustration of how much value Europe is leaving on the table. When financial services cannot flow seamlessly across borders, firms face higher costs and lose the scale benefits of the Single Market. In effect, it functions as an invisible tariff on growth – something global investors recognise immediately, as it drags down the valuation of European companies, including our banks, and raises their cost of capital.

Through the Savings and Investments Union, we are addressing these barriers directly. The goal is to make it easier and more cost-effective to invest, lend and operate across the EU. That means removing unnecessary obstacles in inherently cross-border areas such as market infrastructure and the distribution of investment funds. It also means ensuring that operators providing the same services receive equal supervisory treatment wherever they are in the Union.

To achieve this, we are enhancing the supervisory convergence powers of the European supervisory authorities and exploring where EU-level supervision would deliver clear benefits – for instance, in central counterparties, central securities depositories, trading venues and emerging areas such as crypto-asset service providers. Consistency of supervision is key to building trust and scale.

For the banking sector, fragmentation can only be reduced if we remove the remaining barriers to cross-border integration. That means facilitating mergers and group operations across borders, avoiding unjustified national interventions that block consolidation, and completing the Banking Union – including a credible common deposit insurance scheme. Only then will banks be able to operate as truly European players, benefiting from scale and competing globally on equal terms.

We must also act decisively on barriers that sit outside the financial sector framework. These are often difficult issues, like taxation or insolvency law, that touch upon the very foundations of national interests. Adequately communicating and using all instruments at our disposal, we can involve Member States and market participants in stressing the benefits – for us all – of a truly integrated Single Market. Step by step, dismantling all these barriers will deliver a more capable financial market – one that offers companies better access to financing, gives citizens more choice, and strengthens Europe’s sustainable competitiveness.

You are leading the development of the Savings and Investments Union (SIU), yet EU capital markets remain shallow, and banking is still fragmented across borders. What conditions need to be in place for the Savings and Investments Union to truly take off and deliver on its promises?

The Savings and Investments Union is our blueprint for a financial system that works better for citizens and businesses alike – one that channels Europe’s vast savings into productive investment. But it can only succeed if everyone plays their part. The Commission can set the vision and propose measures, yet real progress requires a shared commitment from Member States, supervisors the financial industry, as well as from citizens and civil society. However complex it may look, finance is something that concerns all of us.

Ultimately, the goal is to evolve from a system that is stable but segmented to one that remains stable but is integrated, dynamic and globally competitive. That means simplifying where possible, ensuring consistency where necessary, and creating the conditions for scale.

We have heard much discussion about (and seen resistance to) the implementation of some global standards, such as the new Basel Committee on Banking Supervision rules on market risk. Is Europe the last stronghold against a regulatory race to the bottom? And if so, is this hurting us economically?

Europe remains firmly committed to the Basel framework. International standards play a double role: they safeguard prudential soundness and ensure a level playing field for globally active banks. The vast majority of the Basel rules have already been implemented in the EU – most recently through the Banking Package, which took effect in January 2025. Other major economies have also implemented the Basel standards, namely Japan, Canada and Australia.

Our commitment, however, does not mean acting in isolation. The reality is that competition in global banking – particularly in trading activities – is intense, and maintaining a level playing field for internationally active banks is crucial, which is in any case the very reason for the existence of the Basel framework.

This is why, in light of the delays in other major markets, we decided to postpone the implementation of the market risk framework (FRTB) until January 2027.

Our objective is to ensure we all uphold sound prudential standards. We will continue to monitor developments closely and align the timing of our implementation with that of our global peers.

Non-bank financial institutions now account for over 40% of financial assets in the EU, and their high level of interconnectedness can further aggravate volatility. How did this sector manage to grow so fast, and what can the EU do to ensure that it’s adequately regulated?

The rapid growth of the non-bank financial sector reflects profound structural changes in our financial system. A prolonged period of low interest rates, investor demand for yield, and tighter bank regulation after the financial crisis encouraged the rise of more market-based financing. This shift has helped diversify Europe’s financial landscape and supported investment – overall, a positive evolution that complements the traditional banking sector.

Increased size and complexity bring new challenges, and the high degree of interconnectedness between non-bank financial institutions means that stress in one part of the system can amplify volatility elsewhere. That is why vigilance is essential.

Within the EU, authorities such as the European Systemic Risk Board, the European Securities and Markets Authority and national supervisors closely monitor these risks and can deploy tools where needed – for example, through liquidity management measures in investment funds or tighter scrutiny of leverage and maturity mismatches. We also work in close coordination with the Financial Stability Board and other international bodies to ensure that our approach remains consistent globally.

Our goal is clear: to preserve the benefits of a broader and more diverse financial sector while ensuring it remains safe, transparent and resilient. A well-regulated non-bank sector strengthens Europe’s capacity to finance growth – but that innovation must always evolve in step with resilience. That being said, as the landscape evolves ever faster, we should keep a permanent vigilance and adapt to new challenges as they arise.