How can the locally focused sa​vings and retail-banking model contribute to further growth in Europe? On the policy front, financial legislation should weave in the principle of proportionality. That means rules applied to all financial institutions, taking into account a bank’s size, nature of its activities, complexity, risk profile and business model. Proportionate regulation should not be linked to size only.

Less risk must lead to less bureaucratic burden for our 650,000 service-driven employees and for our clients. Different regulatory regimes for different banking models would help local and regional banks – oftentimes smaller and less risky – to compete on an equal footing with other players. Doing so would give Europeans better access to much-needed finance.​

The prudential area remains a cornerstone of the proportionality debate. The Basel agreements provide a perfect example of rules designed for large, internationally active banks. Requiring huge administrative and compliance efforts, Basel rules applied to every bank in the same way will lead to a distortion of a level playing field. EU policymakers have an opportunity to change course, and end the regime that requires every bank on the continent to be compliant with the full Basel rulebook. ESBG members are well capitalised with an average CET1 ration of 15.3 per cent, higher than the industry average in EU markets where our banks are present.

Recently, some legislation used proportionality. The latest “risk reduction measures package” included reforms of the Capital Requirements Regulation and Capital Requirements Directive, with some elements of proportionality introduced in the prudential ruleset.

More elements of proportionality should be reflected in existing and future EU banking rules. Relatedly, overabundant regulation affects the financial services workforce too. Proportionality can help boost service levels by reducing the burden faced by bank employees when complying with EU banking rules.

At international level, Basel IV rules were agreed upon several months ago. The big question now is just how will EU decision-makers transpose this agreement into EU legislation? It is imperative that EU decision-makers take into consideration the nature, scale and complexity of the activities of European credit institutions. Given that financing via credit institutions remains by far the most preferred way of external financing for EU citizens and SMEs, Europe must keep a well-functioning banking sector that fulfils its special role in people’s economic lives.

In addition, ESBG favours a break from new waves of regulatory initiatives. It is high time to evaluate the functioning and consequences of current legislation before taking any additional initiatives. One example is MiFID II, where regulation has created a cumbersome process that stifles the commercial process to the detriment of financial institutions and customers alike. Implementing new rules – and complying with them – hit smaller and less-complex institutions particularly hard.