European Central Bank (ECB) Executive Board member and Supervisory Board Vice-Chair Frank Elderson urged Europe to reduce national banking barriers, saying fragmentation raises lenders’ costs and hampers cross-border business.
In an interview with Die Presse published Oct. 20, Elderson described fragmentation as Europe’s main competitive obstacle. Differences in national laws, insolvency rules and consumer protections make it harder for banks to operate across borders, he said.
Elderson called for a European deposit insurance scheme as part of a more integrated banking market. He also opposed weakening core safeguards, citing the costs borne by households, businesses and taxpayers during the 2008 financial crisis.
A separate ECB proposal aims to reduce administrative work for smaller lenders. Under EU rules, banks in the “small and non-complex” category face simpler requirements. The ECB has proposed allowing national authorities to raise the category’s asset limit from €5 billion to as much as €10 billion.
The ECB also wants to revise the criteria used to assess a bank’s complexity. Taken together, the two proposed changes could make about 150 more banks eligible for the simpler regime, the ECB estimates.
More than 1,400 institutions qualified for the category as of December 2025, accounting for 75% of less significant institutions under European banking supervision. The ECB says these banks report around 30% of the data required of larger banks. Elderson said lighter processes would give supervisors more room to focus on significant risks.
Another ECB supervisory deadline is approaching. In a July 7 letter, it told the significant banks it directly supervises to submit plans by Oct. 31 addressing AI-enabled cyber threats. The letter cited faster software patching, stronger detection and oversight of technology providers.
The European Commission plans to present banking measures in the first quarter of 2027. Its outline calls for greater proportionality in rules for smaller banks and a way forward on common deposit insurance.
