Nagel backs financial integration over weaker bank capital
Deutsche Bundesbank President Joachim Nagel backs deeper European capital markets and simpler bank rules without weakening resilience. He cites the Draghi Report's additional investment needs of €750-800 billion annually through 2030.
Fragmentation holds banks back
Speaking at the International Bankers Forum's 40th anniversary conference in Frankfurt, Nagel said European banks retain strong capital and liquidity in 2026, following their resilience during spring 2023 banking turmoil.
US and some British banks outperform European institutions on net interest margins and price-to-book ratios.
He attributed Europe's disadvantage to fragmented markets and complex, sometimes contradictory national rules, not excessive capital.
European Central Bank (ECB) and Bundesbank studies find higher capital ratios lower funding costs and earnings volatility.
He backed the Savings and Investments Union, deeper venture capital markets, securitisation, tokenisation and more integrated trading, clearing, settlement and supervision.
Simpler rules, stronger safeguards
Nagel backed cross-border capital and liquidity management with safeguards, common European deposit insurance and lower sovereign debt concentrations.
The ECB's simplification task force, established in 2025, recommends fewer capital framework components.
German supervisors propose fewer risk-weighted requirements for small, low-risk banks in return for a higher leverage ratio.
The European Commission plans banking legislation in Q1 2027.
The roadmap targets agreement on the 28th corporate regime by end-2026 and securitisation reform taking effect in early 2027.
Integration without weaker buffers
Nagel's prescription is structural integration rather than deregulation that erodes resilience.
He presents securitisation as a bridge that transfers bank risks to investors and frees capital for lending.
Simpler rules must preserve stability while allowing Europe's diverse banking models to compete.