EBA details views on EU banking sector competitiveness
The European Banking Authority (EBA) has submitted its response to the European Commission's consultation on EU banking sector competitiveness. The EBA highlights the sector's resilience, its role in economic growth, and identifies key risks.
Banks underpin EU economic growth
The EBA emphasizes the EU banking sector's increased resilience and robustness, with total EU/EEA bank assets reaching EUR 29 trillion by June 2025, a 3.7% increase year-on-year.
This growth is primarily driven by a EUR 635 billion (3.6%) rise in loans and advances, and a EUR 484 billion (12.8%) increase in debt securities.
Household lending, particularly mortgages, expanded by 2.9% year-on-year to EUR 7.2 trillion.
Corporate lending also grew by 1.8% to EUR 6.4 trillion, with notable increases in non-SME lending.
Certain sectors, such as energy and related utilities (+10% YoY) and information technology (+5% YoY), saw significant lending growth, reflecting strategic priorities like digitalisation and defence spending.
The EBA concludes that credit demand has been met overall, though trends vary across segments and countries.
Fragmentation hinders cross-border services
Market fragmentation poses significant barriers to cross-border access for consumers and businesses.
The absence of cross-border legal recourse for mortgage foreclosure discourages lending across EU member states.
Retail payments also suffer from fragmentation, with no EU-based alternative to US credit card schemes at scale.
Small enterprises face similar challenges due to foreign banks lacking access to standardized financial information.
Despite these hurdles, the EU banking sector benefits from its diversified landscape, including universal, retail, cooperative, and digital banks.
This diversity fosters competition, supports various economic segments, and mitigates concentration risks, contributing to overall financial stability and resilience.
Resilience tested by evolving risks
The EBA's comprehensive response underscores the complex interplay of regulatory frameworks and market dynamics.
While the EU banking sector demonstrates robust resilience, persistent fragmentation and evolving geopolitical risks demand continuous vigilance.
The consultation highlights that future policy must balance fostering competitiveness with safeguarding stability.