- The Nordic banking associations call for EU-level measures to strengthen the competitiveness of banks.
- Their joint policy recommendations include the simplification and harmonisation of regulation and supervision, the balancing of capital requirements and the establishment of clear rules that support competitiveness.
- Nordic banks oppose the introduction of new financial sector taxes and call for the withdrawal of national bank taxes to reduce fragmentation in the single market.
- The aim must be a stable but not overregulated banking sector that enables banks to finance growth, innovation, the green transition and security without compromising stability. The mandates of national and European supervisors must be expanded to include the consideration of international competitiveness and economic growth.
- In Finance Finland’s opinion, any liquidity support arrangements in the European Deposit Insurance Scheme (EDIS) must be based solely on repayable loans. The system must not result in joint liability for losses incurred by banks or investors in other member states.
The Nordic banking associations have prepared policy recommendations for EU-level measures that are needed to strengthen the competitiveness of European banks. The recommendations also include positions on the simplification of regulation, the development of supervision and EU-level tax policy.
“The Nordic banking associations advocate a model in which European banks are stable but not overregulated, taxation is competitive and efficient and the rules are clear. This will enable banks to finance growth, innovation and the major transformations in society”, says Finance Finland’s Director of EU Affairs Mari Pekonen-Ranta.
According to the banking associations’ joint paper, EU banking regulation and supervision must be simplified and harmonised to ensure that European banks are not permanently at a competitive disadvantage compared with their peers from the US and other economic areas.
At the same time, banks’ capital requirements must be balanced so that they do not raise the cost of financing for businesses and households or hinder investments. The Nordic associations oppose the introduction of new financial sector taxes and call for the withdrawal of temporary and permanent national bank taxes, which weaken growth and fragment the single market.
“The overarching goal is to free up banks’ resources so they can finance economic growth, the green transition, innovation and security without compromising the stability of the financial system”, Pekonen-Ranta explains.
It is high time to promote international competitiveness
The input of the Nordic banking associations should be well received, as international competitiveness is one of central policy priorities in the EU at present. Competitiveness was one of the topics discussed when EU leaders met for an informal retreat in February, and later this spring, the President of the European Commission, Ursula von der Leyen, is expected to present a strategic roadmap entitled One Europe, One Market.
“It is well understood within the Commission that Europe’s competitiveness rests on deeper market integration, and in recent months the pace of work in this area has increased noticeably”, says Pekonen-Ranta.
Pekonen-Ranta points out that the objective is a crucial one also for the financial sector.
“European capital markets should be more integrated in several areas, and one of the central components of that is the harmonisation of European financial supervision. Last December, the Commission adopted a comprehensive package of measures on market integration, which will be under negotiation this year. Supervisory mandates should also include the promotion of competitiveness and growth, as Finance Finland and many other European actors have proposed”, Pekonen-Ranta says.
The Commission is scheduled to present a report on the competitiveness of the EU banking sector in the third quarter of 2026. The report will provide an assessment of the situation of the banking system in the single market, focusing on competitiveness and setting out a forward-looking agenda that simplifies and improves regulation without causing further fragmentation. According to Pekonen-Ranta, the aim is sound, but the result will depend on implementation.
“The current regulatory framework is highly detailed and fragmented, and significant simplification is necessary to safeguard the competitiveness of European banks. The need for action is urgent”, Pekonen-Ranta emphasises.
Deposit protection must not entail joint liability
The Commission is also seeking new approaches to reforming the European Deposit Insurance Scheme (EDIS), a project which has been politically stalled for several years. Pekonen-Ranta says the Commission should look for an entirely new approach if it wants to advance this part of the banking union.
“Finance Finland does not consider the EDIS to be a viable system unless the liquidity support granted to banks in distress is based solely on repayable loans. Losses that are directly or indirectly incurred by banks or their investors in other countries must not be covered by a common scheme”, Pekonen-Ranta says.
Pekonen-Ranta highlights that, in order to develop market integration and European competitiveness, it is essential to continue reviewing the full regulatory framework of the financial sector.
“Even the authorities agree that the volume and detail of regulation have increased rapidly in recent years, and the complexity of supervisory layers makes the framework a difficult puzzle to analyse. Finance Finland welcomes the Commission’s aims to clarify and simplify regulation and to reduce administrative burden. This work must continue, and member states must commit to swift implementation of the reforms”, Pekonen-Ranta says.
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