Machado urges bank integration and two-tier capital stack
European Central Bank Supervisory Board member Pedro Machado called for cross-border banking integration and regulatory simplification in Madrid on September 28, 2026. He stated that national fragmentation and complex capital rules limit scale.
Halved data points and one-week approvals
The European Central Bank (ECB) has accelerated supervisory procedures to lower administrative burdens on lenders.
Capital-related approvals, such as own funds reductions, now take around one week instead of several months, with roughly 80 percent of applications qualifying for fast-track processing.
For EU-wide stress tests, the ECB cut the required reporting data points by approximately half and streamlined its short-term reporting exercises.
Supervisors have also reviewed more than 100 supervisory guides to discontinue outdated instructions.
Machado emphasized: “Good supervision is judged not by the volume of letters or procedures it generates, but by how effectively it identifies the risks that matter.”
From nine buffer layers to two
Beyond operational workflows, Machado proposed restructuring the regulatory architecture.
EU banks currently navigate up to nine separate layers of capital requirements and buffers.
He recommended consolidating macroprudential buffers into a two-tier framework of releasable and non-releasable layers.
Machado also pointed to fragmentation costs, including 27 national withholding tax regimes.
The European Commission is scheduled to present a legislative package on banking competitiveness in early 2027.
Frankfurt tweaks cannot replace Brussels laws
Faster approvals provide welcome operational relief, but supervisory pruning cannot fix structural fragmentation.
Without a unified deposit insurance scheme, European banks will never achieve the scale needed to rival US institutions.
True competitiveness hinges on political resolve in Brussels rather than procedural tweaks in Frankfurt.