Angelini: US, EU banks face diverging regulatory paths
Paolo Angelini, Director General of the Bank of Italy, compared the transatlantic operations and regulatory frameworks of US and European banks. Speaking at the AIBE annual meeting in Milan, he highlighted key differences in digital resilience, crypto-assets, and climate policies.
Transatlantic footprints and market focus
Paolo Angelini detailed the transatlantic footprint of US and European banks, highlighting distinct operating models.
Twenty-two US banking groups, including eight G-SIBs, operate in the EU mainly through subsidiaries, a choice influenced by Brexit and the European passport.
In contrast, 25 European banking groups, with six G-SIBs, predominantly use branches in the US, partly due to the 2016 Intermediate Holding Company (IHC) rule.
Both regions are vital: EMEA markets contribute 14 percent of US G-SIB revenues, while the US generates 12 percent for European G-SIBs.
These banks focus on Corporate and Investment banking and Global Markets for large firms and institutions.
US banks dominate Investment banking in the EU, whereas European banks have a more limited presence in the US, reflecting US firms' competitive advantages in scale and specialized expertise.
Diverging regulatory approaches
Angelini highlighted key divergences in EU and US banking regulation, despite shared Basel standards.
For digital operational resilience, the EU's DORA regulation is legally binding, extends to non-banks, and mandates direct oversight of critical tech providers with central resilience tests.
The US relies on non-binding guidelines and discretionary testing.
On crypto-assets, the EU has a transitional regime for the Basel standard and a comprehensive MiCA regulation, with stricter limits than the US GENIUS Act, which focuses only on stablecoins.
For climate policies, the EU integrates risks into supervisory processes, while US authorities maintain a cautious, even openly contrary, stance.
A widening transatlantic gap
The speech highlights a growing transatlantic regulatory divide.
While the EU favors prescriptive, binding frameworks, the US leans towards flexibility, potentially creating arbitrage opportunities.
This divergence could complicate cross-border operations and financial stability efforts, demanding greater international coordination.