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Sustainable Finance

European banks: challenges, opportunities and the need for simplification

Published on 23 September 2025

On 18 September 2025, during the ABBL Banking Summit, Maria Abascal, Chairwoman of the Executive Committee of the European Banking Federation (EBF), shared her views on the strategic priorities and challenges facing Europe’s banking sector during her visit to Luxembourg. In an interview published by Paperjam, she highlighted the need for balanced regulation, simplification, and a forward-looking approach to competitiveness, sustainability and digitalisation

Summary

    A strategic role for banks in Europe

    Maria Abascal underlined that banks remain a cornerstone of Europe’s economy, financing 75% of investments across the continent. In her view, Europe must further develop a Saving and Investment Union to diversify funding sources, while encouraging greater retail investor participation and strengthening capital markets integration.

    At a time when geopolitical tensions and economic fragmentation are reshaping global finance, she called for clarity of direction from European institutions. Clear and consistent rules, she argued, provide businesses and investors with the confidence needed to plan and invest.

    Digital transformation and sustainability

    On digitalisation, Maria Abascal pointed out that European banks are already investing heavily in artificial intelligence, cloud solutions and cybersecurity. She welcomed the EU’s horizontal approach to AI regulation but warned against additional, sector-specific rules that could limit competitiveness. For Europe to remain in the race, she argued, banks must be able to access the most efficient technological solutions while also contributing to Europe’s digital sovereignty.

    Turning to sustainability, she stressed that banks play a crucial enabling role in the green transition but cannot drive it alone. For climate investments to be effective, governments must define clear sectoral policies and provide the right incentives, ensuring that the transition is economically viable for businesses and households alike.

    The case for simplification

    A recurring theme of her message was the need for simplification rather than deregulation. Following years of regulatory expansion, the cumulative burden on European banks risks hampering growth and competitiveness. The EBF’s recent Simply Competitive report sets out proposals to streamline supervisory processes, reduce overlaps in prudential buffers, and ensure that growth and competitiveness are considered alongside financial stability in EU policymaking.

    The ABBL’s perspective

    For Luxembourg and its international financial centre, these debates are particularly relevant. As Maria Abascal noted, Luxembourg’s open, cross-border model continues to be a strength for Europe as a whole, contributing to capital flows, investment, and financial innovation.

    The ABBL fully shares this perspective: ensuring that European banks remain competitive and resilient is not just a sectoral priority, but a collective responsibility with direct implications for Europe’s economic future.

    Source: Paperjam – “Maria Abascal: European banks need simplification, not deregulation” (22 September 2025)