UBS Group AG Chairman, Colm Kelleher, has emphasised the urgency for the European Union (EU) to accelerate its efforts in unifying banking and capital markets, particularly in the absence of the City of London, following Britain’s departure from the EU. Speaking at an event in Davos, Kelleher highlighted that the exit of the City of London has deprived the EU of a key hub for market proficiency, skills, and expertise, describing it as one of the unfortunate consequences of Brexit.
Kelleher expressed the view that Europe, now without Britain, must navigate its path as a relatively closed market. He identified fundamental issues within the EU, citing a decline in European equity market capitalisation over the past 13 years. Notably, he pointed out that banks in Europe contribute to 80% of lending, a stark contrast to the United States. To address this, he stressed the importance of redeveloping the banking union and capital markets within the EU, acknowledging that substantial progress would be a time-intensive process.
While recognising the challenges posed by vested interests, Kelleher emphasised the EU’s need for strategic access to improved markets, emphasising the imperative to work towards a banking union despite the inherent complexities. The absence of a unified capital market in the region has historically hindered retail investing and left companies reliant on bank lending. Kelleher reminded that the banking union, initially conceived during the sovereign debt crisis, aimed to break the “doom loop” between national governments and lenders but remains an unfinished initiative.
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