A Commission report says national intervention and subsidiary-level constraints are holding back EU bank scale, with proposed changes potentially releasing €230 billion of liquid assets.
The European Commission is preparing proposals for the first quarter of 2027 aimed at curbing political interference in cross-border bank mergers and easing internal barriers that it says leave EU lenders too fragmented to compete effectively with larger U.S. rivals. A report released on July 17 says unjustified national interventions have kept most bank consolidation within domestic borders and prevented banking groups from reaching scale at the EU level. The report says Brussels will pursue measures against member states that breach EU rules limiting when governments can intervene in proposed mergers. It also proposes allowing cross-border banking groups to meet capital and liquidity requirements more at the parent level rather than through extra constraints on subsidiaries, a shift the report says could release €230 billion of liquid assets. The critique comes after Germany rejected in June an offer from Italy's UniCredit to take over Commerzbank, a bid first launched in September 2024 that met strong resistance. Germany cited the price offered, while also stressing Commerzbank's importance to German companies and arguing it should remain under German ownership. The Commission report also says it will replace a decade-old proposal for a European deposit insurance scheme with a new plan to deepen deposit insurance measures in the bloc. Banking industry reaction was mixed, with French banking lobby FBF welcoming several elements but calling for more concrete action, while Deutsche Bank CEO and president of the Association of German Banks Christian Sewing urged quick changes on the output floor, trade finance, software investments and financial stability buffers.