In a keynote speech at the European Systemic Risk Board’s annual conference, European Central Bank Vice-President Boris Vujčić argued that reducing capital requirements would be unlikely to materially increase bank lending under current conditions. He said regulatory, supervisory and reporting frameworks should be simplified without weakening resilience, while identifying a genuine Single Market and a complete banking union as the strongest means of improving European banks’ competitiveness and scale. Euro area banks’ median Tier 1 capital ratio has risen from about 8% in 2009 to more than 16%, while profitability, valuations and capital headroom have strengthened. Second-quarter 2026 reporting showed further profitability gains, and bank lending surveys indicate that credit standards primarily reflect risk perceptions, economic uncertainty and subdued demand rather than capital constraints. Vujčić reiterated earlier ECB proposals to consolidate capital and leverage ratio buffers, align minimum requirement for own funds and eligible liabilities and total loss-absorbing capacity frameworks, and create a simpler but conservatively calibrated regime for smaller banks. Cross-border lending to euro area companies remains about 16% of total corporate lending, below the roughly 20% extended to companies outside the euro area. Vujčić called for completion of the banking union, including a European deposit insurance scheme, further capital markets integration and greater harmonization of national rules that impede cross-border investment and consolidation.
European Central Bank Vice-President Boris Vujčić says financial integration, not capital cuts, is key to bank competitiveness
European Central Bank Vice-President Boris Vujčić said cutting capital requirements would be unlikely to materially increase lending because euro area banks have ample capital headroom and credit conditions mainly reflect demand, risk and economic uncertainty. He backed simpler prudential rules that preserve resilience, but argued that completing the banking union and integrating EU financial markets would do more to strengthen bank competitiveness.