Pim Rank: The European banking sector must become more competitive
This column was originally written in Dutch. This is an English translation
On 17 April 2026, the Netherlands submitted its response to the European Commission’s consultation on the competitiveness of the European banking sector. The response calls for the strengthening of the internal market and the simplification of the regulatory framework.
By Prof. Mr Pim Rank, Solicitor at NautaDutilh in Amsterdam and Professor of Financial Law at Leiden University
The consultation response was drawn up by the Ministry of Finance and DNB, just before the consultation period closed. In addition to the consultation response, the Ministry published a non-paper on 17 April 2026 setting out a number of concrete proposals to make the European banking sector more competitive.
The starting point of the Dutch position is that the competitiveness of the European banking sector must be improved by i) strengthening the internal market for banking services and, in that context, completing the banking union, and ii) simplifying and further harmonising the regulatory framework. It is noted, however, that it is essential for the EU to remain committed to international standards, to continue striving for a level playing field at both European and international level, and to ensure that financial stability is maintained.
With regard to strengthening the internal market for banking services and completing the banking union, it is noted that barriers exist in EU banking regulations which prevent capital and liquidity from flowing freely within the EU. This leads to fragmentation along national borders and a reduction in cross-border banking services. As the Netherlands and the EU have a stake in further integration, it is argued that the existing options for liquidity waivers should be improved, cross-border capital waivers (with safeguards) should be introduced, and the portability of deposit guarantee scheme (DGS) funds within the EU should be enhanced.
With regard to the simplification and further harmonisation of the regulatory framework, it is noted that the Netherlands is committed to simplifying the macroprudential buffer requirements by merging two existing buffers into a single macroprudential buffer. In this regard, an underlying, more harmonised methodology for these and other buffers (for systemically important banks) should lead to greater consistency for banks in the approach taken by different supervisory authorities across Europe. The Netherlands is also committed to eliminating overlap between micro- and macroprudential requirements. Furthermore, it advocates for better alignment between the resolution framework and ongoing banking supervision, and for greater coherence within the resolution framework. The Netherlands also aims to achieve greater proportionality in the regulatory framework for smaller banks by extending the specific regime currently in place for these banks.
It is clear that global shifts in power have led to a reassessment of the EU’s policy priorities. This also applies to the rules governing banks. The European regulatory framework for banks is extremely complex due to its multi-layered structure, the interdependence of the various regulations and the level of detail involved. If the European banking sector is to continue to play a central role in the global economy in the near future, adapting these rules will be inevitable.
The Dutch government has recognised this. The question, however, is whether strengthening the single market and simplifying the existing rules will be sufficient to maintain the competitiveness of the European banking sector, or whether more is needed. I fear that, in any case, this will also require us to move away from the new capital rules arising from Basel IV, which are perceived as too burdensome in competing economies, such as the US and China, and are therefore not being implemented there, or at least not in the same way. Notable examples in this regard include the restriction on the use of internal models and the output floor of 72.5 per cent of the capital required under the standardised approach.