ABBL publishes its response to the European Commission’s consultation on banking competitiveness

This week, the ABBL published its response to the European Commission’s consultation on the competitiveness of the EU banking sector, a key milestone in shaping the future regulatory environment for European banks.

Three questions to Sandrine Roux, Secretary General, and Alexandre Dias, Adviser, Financial Markets & ESG, who have coordinated the ABBL and its members’ response to this consultation.

1. Why is the consultation on banking competitiveness strategic for the banking sector and the European economy?

This consultation comes at a pivotal moment for Europe. After years focused on financial stability, there is now a clear shift towards simplification and competitiveness. While 2025 focused on advancing capital markets (CMU, SIU), 2026 is shaping up to be the year of banking competitiveness.

European banks are strong, resilient and well capitalised, but their ability to support growth is constrained by an overly complex and fragmented regulatory environment. Unlocking this potential is essential to finance key priorities such as infrastructure, innovation and the green transition.

2. How did ABBL organise its response to the European Commission consultation?

We aligned closely with the European Banking Federation’s timeline and built on its comprehensive work, while adapting it to Luxembourg’s specific context.

Most importantly, we actively engaged our members across multiple expert communities. The response rate was exceptionally high, three to four times above a typical consultation, reflecting both the importance of the topic and the strong commitment of the sector.

3. Where did ABBL particularly make its voice heard?

While there is broad consensus across the European banking sector on many issues, ABBL strongly emphasised the need for a truly risk-based and operational approach to proportionality.

Today, the framework is often perceived as “one size fits all”, with requirements applied in a similar way regardless of a bank’s size, business model or risk profile. This creates disproportionate costs and complexity, particularly for smaller or less complex institutions, and ultimately reduces the sector’s ability to finance the economy.

ABBL advocates for a more systematic application of proportionality across regulation and supervision, ensuring that rules are necessary, appropriately calibrated and aligned with actual risks. This also means making better use of existing flexibilities, embedding proportionality in new rulemaking, and fostering a more risk-based supervisory culture.