Simplification

Europe’s financial services sector is burdened by excessive rules. As of mid-last year, more than a quarter of EU Delegated Acts adopted across all policy areas concern financial services – more than agriculture and environment combined. And that’s before counting the EU Directives, Regulations, national laws and supervisory expectations layered on top or underneath. The volume has become so vast that it is hard to keep track.

Digitalisation is rapidly transforming capital markets, reshaping how capital is raised, traded, and allocated - a process which will continue and accelerate in the coming years.

The Association for Financial Markets in Europe (AFME) has today published a report highlighting the critical barriers still limiting EU banking consolidation, including over €475 bn in capital and liquidity trapped by regulatory ringfencing, as well as the fact EU banks face higher funding costs versus global peers with stringent MREL requirements (28% of risk weighted assets) exceeding levels in the US (22%) creating a competitive disadvantage. Furthermore, our report finds EU Banking M&A is the slowest in the world with acquisitions taking 285 days on average – far longer than the US (219 days) delaying consolidation and weakening the sector’s efficiency.