EC report on EU bank competitiveness: If policy is a pendulum, the market should like this

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EC report on EU bank competitiveness: If policy is a pendulum, the market should like this

Global Research

20 July 2026ab

First Read

EquitiesEuropean Banks

EC report on EU bank competitiveness: If policy Europe including UK

is a pendulum, the market should like this Banks

Jason Napier, CFA

Analyst

jason.napier@ubs.com

The direction of travel probably matters more than the near term policy impacts +44-20-7568 5037

On Friday the European Commission published its communication on the Ignacio Cerezo

competitiveness of the EU banking sector. The document highlights three impediments Analyst

to a more competitive sector: i) market fragmentation, ii) aspects of how international ignacio.cerezo@ubs.com

capital rules have been applied, and iii) regulatory complexity. The document's myriad +44-20-7568 4409

proposals will take time to implement - a legislative package is due in 1Q27 - and Sanjena Dadawala

calibration of each proposal will determine how much better things get for banks. Near Analyst

term, the most important thing is that if regulation does follow the path of a pendulum sanjena.dadawala@ubs.com

then, for the first time in a long while, the future cost of Eurozone regulatory compliance +44-20-7567 0753

might be lower not higher than in the past, a factor in deciding what P/E to pay. Johan Ekblom, CFA

Banks crucial to financing everything, geopolitics underpins focus on autonomy johan.ekblom@ubs.com

The EC says"Banks play a key role in the EU economy and a competitive banking sector +44-20-7568 3580

is essential to finance growth, innovation and strategic priorities" and"[in] a rapidly Alvaro Fernandez-Garayzabal

evolving geopolitical landscape, these various roles of the banking sector are even more Analyst