Brussels plans to overhaul banking rules to challenge US dominance

The European Commission’s upcoming intervention addresses a persistent structural weakness: while many EU lenders dominate their domestic markets, they remain dwarfed by US rivals on the international stage. An executive report highlights that unjustified political interference from member states—most recently demonstrated by Germany’s rejection of UniCredit’s bid for Commerzbank—prevents the formation of true pan-European banking champions.

To counter this, the Commission intends to enforce stricter oversight on national governments that block mergers for protectionist reasons. Beyond curbing political interference, the plan targets the current regulatory architecture. By allowing banking groups to manage capital and liquidity requirements at the parent level rather than through fragmented subsidiary silos, the EU could potentially release 230 billion euros in liquid assets back into the economy.

Industry reaction remains cautious. While some, like the French banking lobby FBF, welcomed the shift in focus, others like Deutsche Bank CEO Christian Sewing are pressing for more aggressive reforms, specifically regarding capital output floors and financial stability buffers. The Commission’s proposals, expected in the first quarter of 2027, represent a pivot toward prioritizing market integration over national control to close the competitiveness gap with the United States.