Report calls for Easing of Capital Rules in EU

A new study from the European Banking Federation and Oliver Wyman suggests that European Union banks could increase lending by almost 30% if they were subject to the same capital requirements as their American counterparts.

The report claims that a review of current capital requirements and supervisory processes could result in an additional 4-4.5 trillion euros of lending.

The study also found that the difference in regulatory-induced costs at EU banks compared to their U.S. peers can account for a gap of 0.8-1.0 percentage points in return on equity.

The report calls for policymakers to strengthen their efforts to complete the banking and capital markets unions and for banks to focus on improving operational efficiency and digitization in preparation for a long-expected process of consolidation in the euro zone.