European Central Bank’s Elderson backs raising simplified bank regime asset threshold to EUR 10 billion

In an interview, European Central Bank (ECB) Executive Board member and Supervisory Board Vice-Chair Frank Elderson supported raising the total asset threshold for banks classified as small and non-complex from EUR 5 billion to EUR 10 billion. This would bring about 150 additional banks into a simplified regime whose reporting requirements cover no more than 30% of the data required from large banks. He also discussed longer intervals between regulatory reviews where risk profiles permit and greater use of existing data for stress tests. These options give more detail to his earlier call to expand proportionality for smaller institutions, rather than announce an adopted change. Elderson reiterated that simplification must preserve core prudential standards and accompany deeper European banking integration, not deregulation. Fragmented legal frameworks, insolvency regimes and consumer protection rules constrain banks’ scale and efficient allocation of capital and liquidity. He called for the European Commission’s banking reform package to address simplification and integration together, including progress toward a European deposit insurance scheme. Internationally, he defended Basel minimum standards, warning that loosening Pillar 1 requirements could merely shift the burden from regulation to supervision. On emerging risks, Elderson recalled that the ECB asked banks in July to reassess cybersecurity measures and review IT budgets and staffing in response to artificial intelligence threats. Banks are expected to submit concrete action plans addressing AI-related cyber risks by the end of October. He also highlighted risks from excessive reliance on AI models and concentrated cloud providers. Banks must examine their links with non-bank lenders, including overlapping exposures to private credit providers and their borrowers that can conceal risk concentrations.