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Europe’s biggest banks and insurers have called for EU regulators to be given a formal objective to support economic growth and competitiveness, intensifying the sector’s drive to ease the cost and complexity of its rules.
Zurich Insurance Group chair Michel Liès has written to European Commission president Ursula von der Leyen urging her to follow the example of the UK, which imposed a similar growth objective on its financial regulators a few years ago.
“The fact that London has reacted a little bit quicker than Brussels is probably due to the complexity of Europe — but we just want to make sure that we put that on the table,” Liès told the FT. “If we don’t address these urgent issues in the continent of Europe it will be too late.”
The chair of Switzerland’s biggest insurer signed the letter as head of the European Financial Services Round Table (EFR), an influential lobbying group of chairs and chief executives at the region’s 24 largest banks and insurers.
Arguing that “competitiveness and stability are not mutually exclusive: both are essential if Europe is to compete on the global stage”, he called for the EU’s six main financial authorities to be given clear growth and competitiveness mandates.
“European regulators and supervisors have been given one statutory objective: financial stability,” he wrote. “Stability has too often become a justification for adding new layers of requirements without assessing their impact, effectiveness or cumulative cost burdens that inevitably fall on our clients.
“This stands in contrast to most of Europe’s peers.”
Since the UK’s two main financial regulators were given secondary mandates to support economic growth and competitiveness in 2023, ministers have pressed them to keep showing evidence that they are fulfilling this objective.
“The UK’s regulatory experience — where the sector has been included as a priority in the industrial strategy and competitiveness recognised as a legitimate objective alongside stability — offers a model ambition for Europe,” wrote Liès.
The EFR’s letter underlines how bosses of banks and insurers are losing patience with the slow pace of regulatory reform in Brussels, worrying they risk being left at a disadvantage compared to rivals in the US, where restrictions are being eased more aggressively.
The EU’s financial regulators have mandates to focus on the stability of the sector and protecting consumers, which executives complain is an incentive to keep adding more layers of complex rules without considering whether they could constrain growth.
The EFR, which includes the chairs and CEOs of BNP Paribas, Barclays, Santander, Allianz, Deutsche Bank, UBS and ING, said that giving regulators a formal growth and competitiveness mandate would “strengthen their accountability before the European parliament”.
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EU legislation would likely be needed to change the mandates of the bloc’s regulators, including the European Securities and Markets Authority, the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Central Bank.
But the idea of changing EU regulators’ objectives is gathering steam. Last month, European finance ministers urged the Commission to “consider improvements to the mandates” of the EU’s main financial regulators, including the ECB’s Single Supervisory Mechanism that oversees the biggest banks, to make them more accountable.
The Commission said EU regulators “focus mainly on the stability and effectiveness of the financial system”. It added that a proposed reform of the European Securities and Markets Authority — the equivalent of the UK’s FCA — “did not propose giving ESMA a competitiveness mandate” though a “few enhancements” were being made.
The Commission plans to publish a report on the competitiveness of Europe’s banking sector later this year.
Additional reporting by Paola Tamma in Brussels