Sittings · Compare

What changed

From · act followup · 2025-08-07 SP-2025-08-07-TA-10-2025-0105 Follow up to T10-0105/2025

→

To · Plenary report · 2025-03-26 A-10-2025-0044 on Banking Union – annual report 2024

+130 added · −44 removed · 1 modified paragraphs hide unchanged text

~~Follow-up to the European Parliament non-legislative resolution on Banking Union – annual report 2024~~

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

~~Rapporteur: Ralf SEEKATZ (EPP/DE)~~

on Banking Union – annual report 2024

~~References: 2024/2055(INI) / A10-0044/2025 / P10_TA(2025)105~~

(2024/2055(INI))

~~Date of adoption of the resolution: 8 May 2025~~

– having regard to its resolution of 16 January 2024 on Banking Union – annual report 2023,

~~Competent Parliamentary Committee: Committee on Economic and Monetary Affairs (ECON)~~

– having regard to the Commission’s follow-up to Parliament’s resolution of 16 January 2024 on Banking Union – annual report 2023,

~~Brief analysis/ assessment of the resolution and requests made in it:~~

– having regard to document published by the European Central Bank (ECB) on 25 March 2024, entitled ‘Feedback on the input provided by the European Parliament as part of its resolution on Banking Union 2023’,

Through this resolution, the European Parliament adopts its tenth Annual Report on the Banking Union. The resolution is divided into four main sections. The first two (General Considerations and Supervision) cover a wide set of issues related to the financial sector, in particular banking. The last two sections (Resolution and Deposit Insurance) are focused on the core issues relevant for further developing the Banking Union.

– having regard to the ECB’s 2023 Annual Report on supervisory activities, published in March 2024,

In section 1 ‘General Considerations’ and section 2 ‘supervision’ the European Parliament notes that Banking Union will not be complete without its the third pillar (i.e. the European Deposit Insurance Scheme) and asks that the completion of both the Capital Market Union (CMU) and the Banking Union (BU) remains a priority. The European Parliament urges the Commission to assess the need for proportionality in regulation, particularly for small and medium-sized banks; to explore options for streamlining the implementation of Basel III and evaluating third-country equivalence decisions; and to address the issue of 'bank desertification' caused by branch closures.

– having regard to the 2023 Annual Report of the Single Resolution Board (SRB), published on 28 June 2024,

The report also emphasises the need to develop frameworks to enhance small and medium-size enterprises (SMEs) and start-up access to finance. The Parliament calls for strengthening further cyber resilience and ensuring safeguards in digital finance, guaranteeing political oversight in any decision on the introduction of a digital euro, embedding sustainability into supervisory and resolution frameworks, and supporting the effectiveness of the Anti-Money Laundering Authority (AMLA). Additionally, it calls for promoting gender balance in bank management and improving financial literacy to support cross-border activity and system resilience. It also requests the introduction of macroprudential tools for Non-Bank Financial Intermediaries (NBFIs).

– having regard to the adoption of the Anti-Money Laundering Directive (AMLD) and the Anti-Money Laundering Regulation (AMLR), and to the establishment of the Anti-Money Laundering Authority (AMLA),

In section 3 ‘resolution’ and section 4 ‘deposit insurance, the European Parliament recalls its position on the crisis management and deposit insurance framework to ensure a more consistent approach across all Member States to the application of resolution tools and deposit protection to enhance financial stability, taxpayer protection and depositor confidence. The European Parliament stresses that the bail-in of shareholders and creditors must remain the main source of resolution financing before any recourse to industry-funded sources.

– having regard to the implementation of the Basel III standards, namely to the adoption of amendments to the Capital Requirements Directive and to the Capital Requirements Regulation,

The European Parliament also stresses that the write-down or conversion of bank eligible liabilities issued to non-EU investors should be enforceable with full certainty, and recalls that it is important to clarify the role of the ECB with regard to the provision of liquidity in resolution. Finally, the European Parliament calls for the ratification of the Amending Agreement to the European Stability Mechanism (ESM).

– having regard to the adoption of Commission Delegated Regulation (EU) 2024/2795 of 24 July 2024 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the date of application of the own funds requirements for market risk,

The European Parliament recalls the position adopted by the Committee on Economic and Monetary Affairs on a European Deposit Insurance Scheme in April 2024. It waits for and encourages the Council to move forward with the negotiations for a European Deposit Insurance Framework. It underlines the need to take specific national characteristics into account and to preserve well-functioning systems for smaller banks, such as institutional protection schemes.

– having regard to its position at first reading of 24 April 2024 on the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action,

~~Response to requests and overview of actions taken, or intended to be taken, by the Commission:~~

– having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action,

~~General remarks~~

– having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency,

In paragraph 2, the European Parliament asks the Commission to prioritise the completion the Banking Union and Capital Markets Union, stressing their role in improving access to finance for households and SMEs, reducing reliance on bank credit, boosting investment, job creation, financial stability and competitiveness, and supporting the green and digital transition. It also calls for consideration of different banking models while ensuring a level playing field. Furthermore, in paragraph 7, the European Parliament urges the Commission to evaluate the necessity of developing targeted frameworks within the Banking Union to improve access to finance for SMEs and start-ups, acknowledging their vital role as the backbone of the EU economy. In paragraph 10, the European Parliament invites the Commission to further examine whether establishing a separate jurisdiction for EU banks with significant cross-border operations could contribute to completing the Banking Union or, conversely, risk increasing fragmentation within the banking sector. In paragraph 14, the European Parliament takes the view that the Commission should prioritise measures that support digitalisation, modernisation, simplification, streamlining, and enhanced competitiveness; stresses that legal certainty, security, predictability, and stability are crucial for enabling EU banks to operate in a favourable environment.

– having regard to the report of its Committee on Economic and Monetary Affairs of 23 April 2024 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit Insurance Scheme,

The Commission fully agrees that the completion of the Banking Union and the Capital Markets Union must remain key priorities. It is against this background that the Commission has adopted the new Savings and Investments Union (SIU) Communication in March 2025, including banking and capital markets. In the face of shifting geopolitical dynamics and escalating security concerns, of climate change and technological development, the EU needs the SIU to create the conditions for efficiently mobilising private capital into growth-driving strategic investments. Furthermore, the SIU is pivotal in providing diversified investment opportunities for EU citizens, enhancing their wealth-building potential and retirement security. This is vital amidst demographic shifts and economic challenges. By expanding capital markets, the SIU can also support all companies wherever they are located in the Union, including small and medium-sized enterprises (SMEs) by giving more diverse funding sources next to traditional banking. Crucially, the SIU addresses market fragmentation that hinders financial integration and imposes substantial economic costs. By dismantling these barriers, the SIU can enhance the EU’s economic strength, competitiveness, and open strategic autonomy. Overall, the SIU is indispensable for enhancing the EU's economic competitiveness and securing its geopolitical and strategic future.

– having regard to the Commission proposal of 14 March 2018 for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral (COM(2018)0135),

The Commission is proactively working on a report assessing the overall situation of the banking system in the Single Market. This report will include an assessment of the sector's competitiveness, as well as an evaluation of existing barriers and market fragmentation. This report is referred to as the 2026 Report, and it is scheduled for completion next year. The 2026 Report will consider all the issues mentioned by the European Parliament. The Commission recognises the demand for simplification and burden reduction, as the current framework for banks combines microprudential, macroprudential and resolution requirements.

– having regard to the Five Presidents’ Report of 22 June 2015 entitled ‘Completing Europe’s Economic and Monetary Union’,

In paragraph 8, the European Parliament regrets the still limited cross-border activity of EU banks, especially in the area of lending; therefore, considers it essential to complete the Banking Union in order to support the free movement of capital within a fully integrated internal market.

– having regard to Enrico Letta’s report of 10 April 2024 entitled ‘Much more than a market – Speed, security, solidarity: empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’,

The Commission fully agrees with the European Parliament’s assessment. In order to reap economies of scale and scope and, given the advances in the European supervisory and regulatory framework, banks should operate more across borders and contribute to financial integration in the single market. The Commission’s position is clear: banks should engage in greater cross border activity, scale up and consolidate, in order to enhance the functioning of the Single Market and to better compete in global financial markets.

– having regard to Mario Draghi’s report of 9 September 2024 entitled ‘The future of European competitiveness’,

In paragraph 11, the European Parliament notes that a review of the securitisation framework to strengthen European markets, as well as the introduction of European Secured Notes as a dual-recourse funding instrument for SMEs' long-term financing, could be explored.

– having regard to the Eurogroup statement of 11 March 2024 on the future of Capital Markets Union, and to the Eurogroup statement of 16 June 2022 on the future of the Banking Union and the Eurogroup follow-up thereto of 28 April 2023,

The Commission is pursuing work on securitisation as requested by the European Parliament and the European Council. On 17 June the Commission has adopted a package of measures to make the EU securitisation framework simpler and more fit for purpose. The proposed measures seek to facilitate securitisation activity in the EU while continuing to safeguard financial stability. However it should be noted that regulation has its limits: unless banks are willing and able to standardise and scale their issuance of securitisations, the market will not scale up significantly. On European Secured Notes, the Commission looks forward to the reply from the European Banking Authority to the call for advice on the Covered Bonds Directive, which should also cover the topic.

– having regard to the Basel Committee on Banking Supervision’s disclosure framework for banks’ cryptoasset exposures and to the targeted amendments to its prudential standard on banks’ exposures to cryptoassets, both published on 17 July 2024,

– having regard to the Basel Committee on Banking Supervision’s core principles for effective banking supervision, published on 25 April 2024,

– having regard to the ECB’s Financial Stability Review of May 2024,

– having regard to the ECB Occasional Paper No 328 of 2023 entitled ‘The Road to Paris: stress testing the transition towards a net-zero economy’,

– having regard to the Financial Stability Board publication of 9 November 2015 entitled ‘Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution’,

– having regard to the Financial Stability Board report of 10 October 2023 entitled ‘2023 Bank Failures – Preliminary lessons learnt for resolution’,

– having regard to Peterson Institute for International Economics Working Paper No 24-15 of 25 June 2024 entitled ‘Europe’s banking union at ten: unfinished yet transformative’,

– having regard to the Single Supervisory Mechanism supervisory priorities for 2024-2026, published in December 2023,

– having regard to the SRB’s biannual reporting note to the Eurogroup of 13 May 2024,

– having regard to the outcome of the 2023 EU-wide transparency exercise of the European Banking Authority, published on 28 July 2023,

– having regard to Special Report 12/2023 of the European Court of Auditors of 12 May 2023 entitled ‘EU supervision of banks’ credit risk – The ECB stepped up its efforts but more is needed to increase assurance that credit risk is properly managed and covered’,

– having regard to the statements by Claudia Buch, Chair of the Supervisory Board of the ECB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 2 September 2024,

– having regard to the statements by Dominique Laboureix, Chair of the SRB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 23 September 2024,

– having regard to the European Banking Authority’s risk assessment reports of July 2024 and December 2024,

– having regard to its resolution of 14 March 2019 on gender balance in EU economic and monetary affairs nominations,

– having regard to its resolution of 25 March 2021 on strengthening the international role of the euro,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A10-0044/2025),

A. whereas the Banking Union (BU) encompasses the Single Supervisory Mechanism, the Single Resolution Mechanism and a European deposit insurance that is still missing;

B. whereas the main objective of the BU is to safeguard the stability of the banking sector in Europe and prevent the need to bail out banks at risk of failure with taxpayers’ money;

C. whereas a completed BU would be a positive development for citizens and the EU economy, as it would improve the competitiveness and stability of the banking sector, reduce systemic risk, improve supply and consumer choice and offer increased opportunities for cross-border banking that enhances access to financing for households and businesses, thereby reducing costs for banks’ customers, while ensuring that public funds are not used to bail out the banking sector; whereas the ‘too big to fail’ risk has not yet been fully addressed;

D. whereas concluding the reform of the EU frameworks for bank crisis management and deposit insurance, focusing particularly on small and medium-sized banks, is fundamental in order to provide Europe’s banking sector with security, stability and resilience; whereas a complete BU with a true European deposit insurance scheme is a basic condition for ensuring that citizens trust European banks;

E. whereas fragmentation and the lack of cross-border consolidation of the EU banking sector is affecting its global competitiveness; whereas the profitability gap between EU and US banks has widened;

F. whereas a strong and diversified banking sector is key to delivering economic growth, increasing the possibility of home ownership, fostering investment and job creation, financing small and medium-sized enterprises (SMEs) and start-ups and ensuring the transition to a green and digital economy;

G. whereas around 80 % of external financing for EU companies comes from banks, while only 20 % comes from the capital markets; whereas only 30 % of credit for US firms comes from banks, while 70 % is funded via capital markets, including corporate bond holdings and shares;

H. whereas the EUR 356.1 billion in non-performing loans recorded at the 110 supervised institutions in 2024, compared with EUR 988.9 billion in non-performing loans recorded at the 102 supervised institutions in the second quarter of 2015, reflects a significant downward trajectory, leaving the total non-performing loan stock at 36 % of its 2015 level; whereas further efforts are required;

I. whereas in April 2024, it adopted its position on the review of the crisis management and deposit insurance framework;

J. whereas in April 2024, its Committee on Economic and Monetary Affairs adopted a report on the Commission’s proposal to establish a European deposit insurance scheme;

K. whereas financial institutions rely increasingly on the use of information and communications technology (ICT); whereas the digitalisation of finance provides key opportunities for the banking sector and has brought about significant technological advances in the EU banking sector through increased efficiency in the provision of banking services and a greater appetite for innovation; whereas it also poses challenges, including with regard to data protection, reputational risks, anti-money laundering and consumer protection concerns; whereas the EU banking sector must increase its cyber resilience to ensure that ICT systems can withstand various types of cyber security threats; whereas the ECB is currently studying the establishment of a digital euro;

L. whereas EU banks have withstood the impact of Russian aggression; whereas they play a pivotal role in ensuring the ongoing implementation of and compliance with the sanctions imposed by the EU against Russia in response to the invasion; whereas further coordination is needed to avoid circumvention of sanctions;

M. whereas climate change, environmental degradation and the transition to a low-carbon economy are factors to be taken into account when assessing the risks on banks’ balance sheets, as a source of risk potentially impacting investments across regions and sectors;

General considerations

1. Acknowledges the progress made over the last 10 years through the establishment of the Single Supervisory Mechanism (SSM) and Single Resolution Mechanism (SRM); notes that the BU will not be completed without the establishment of its third pillar, the European deposit insurance scheme;

2. Asks the Commission to ensure that the completion of the BU and the Capital Markets Union remains a key priority; highlights that these projects offer households and SMEs access to broader funding, reduce the high reliance on bank credit to foster investments and job creation, increase financial stability, reduce the impact of economic downturns, support competitiveness, give additional investment opportunities, fund the transition to a green and digital economy and unlock the EU’s growth potential; notes that the Commission is requested to take into consideration the specificities of the different banking models, while preserving a level playing field;

3. Notes the need to be prepared for episodes of banking stress that could potentially lead to bank runs such as those witnessed in some jurisdictions outside the EU in March 2023, and the need to ensure the stability of deposits;

4. Points out that cyber resilience is a key element for the competitiveness of the EU banking sector, in particular taking into account the geopolitical situation and the need to preserve financial stability;

5. Notes that a more integrated BU would help to make the EU banking sector more resilient, improve access to credit and reduce costs; notes that better cross-border integration of banking business would increase the potential for private risk sharing and ensure diversification in the EU banking market; points out that a more integrated BU is not necessarily the same as a more consolidated banking market and that there are benefits for competition in a diversified banking market; stresses that a fully developed BU would allow EU banks to grow and put them in a better position to compete in the international arena;

6. Regrets that EU banks’ ability to finance major investments is constrained by lower profitability that is not sufficient to ensure their competitiveness; notes that the profitability gap as compared with other jurisdictions is due to both structural and regulatory factors and calls for a review to streamline the regulatory framework; notes that the specific character of the EU banking system, with its large number of smaller banks, calls for proportionate solutions that take this into account and are tailored to its characteristics, without undermining financial stability; remains mindful of the ‘too big to fail’ risk;

7. Calls on the Commission to assess the need to develop targeted frameworks within the BU to enhance access to finance for SMEs and start-ups, recognising their role as the backbone of the EU economy;

8. Regrets that EU banks’ cross-border activity is still rather limited, particularly with regard to granting loans; takes the view, therefore, that it is important to complete the BU in order to uphold the free movement of capital in a fully integrated internal market;

9. Calls on the EU banks still operating in Russia to exit the Russian market as soon as possible; calls on supervisory institutions to ensure that those banks push ahead with exiting the Russian market swiftly;

10. Invites the Commission to further explore whether the creation of a separate jurisdiction for EU banks with substantial cross-border operations could help to complete the BU or whether this would increase banking sector fragmentation;

11. Notes that a review of the securitisation framework to strengthen European markets and the introduction of European Secured Notes as a dual-recourse funding instrument for SMEs for long-term financing could be explored, taking due account of financial stability risks;

12. Underlines that financial literacy is essential in modern economies, contributing to the resilience of the banking systems across Member States and encouraging cross-border financial activity;

13. Underlines that a high level of consumer protection will make the BU more resilient;

14. Takes the view that the Commission should focus on aspects that contribute to achieving the goals of digitalisation, modernisation, simplification, streamlining and increased competitiveness; maintains that legal certainty, security, predictability and stability are essential for EU banks to be able to operate under favourable conditions;

15. Notes that, in addition to traditional loans, diverse sources of financing can be beneficial for EU growth and EU competitiveness, and recognises the low-risk nature of asset-backed financing solutions;

16. Notes the ECB’s progress on the digital euro and the parliamentary dialogue being held with the ECB on the topic; understands existing reservations, such as with regard to its offline functionality, given that offline transactions reduce visibility and impair financial crime prevention; recalls that the digital euro should complement, not replace, cash; considers that the decision on whether or not to introduce a digital euro is ultimately a political decision that has to be taken by the EU’s co-legislators, given the profound potential impact of this decision on a wide range of EU domains, including privacy, consumer protection, financial stability, financial policy and other areas that go beyond the strict remit of monetary policy;

17. Regrets the failure of some financial institutions to ensure gender balance, especially in their management bodies; stresses that gender balance on boards and in the workforce brings both societal and economic returns; calls on financial institutions to regularly update their diversity and inclusion policies and help to foster healthy working cultures that prioritise inclusivity; calls on private and public entities to address the lack of diversity and gender balance in the management bodies of financial institutions;

Supervision

~~In paragraph~~18. ~~18,~~Welcomes the ~~European Parliament~~adoption ~~welcomes~~by the ~~adoption~~co-legislators of the new EU banking package ~~that implements~~implementing Basel III standards ~~but~~in the EU; notes the ~~uncertainty~~current ~~surrounding~~lack ~~its~~of clarity concerning the implementation of the Basel III standards in some other ~~jurisdictions,~~jurisdictions ~~which~~and ~~could~~the ~~impact~~potential ~~global~~risk ~~competition.~~for Itan ~~urges~~international level playing field; stresses that the Commission toshould ~~assess~~evaluate whether targeted ~~adjustments~~changes ~~are~~could ~~required~~help to ~~protect~~maintain the international competitiveness of EU banks without ~~compromising~~weakening their ~~resilience.~~resilience; ~~Recalling~~recalls that the ~~one-year~~delegated ~~delay~~act toon 1the ~~January~~date ~~2026~~of inapplication ~~applying~~of the own funds requirements for market risk postponed the date of application of the new market risk ~~rules,~~framework itby one year to 1 January 2026; calls on the Commission to ~~review~~assess whether the equivalence decisions taken with ~~non-implementing~~the jurisdictions not implementing the Basel III standards need to be reviewed in order to ~~protect~~preserve the financial stability of the EU financial ~~stability.~~sector;

The application of the final Basel III standards in the European Union since 1 January 2025 is a very important achievement and marks the completion of a very long reform process. The Banking Package is a balanced compromise that keeps all EU banks resilient, as at European level Basel standards apply to all 4500-plus banks while responding to the specificities of the EU economy. It is in the best interest of the EU, as only stable banks can contribute to sustainable economic growth.

19. Recalls that the Banking Package contains a high number of mandates to the European Banking Authority; calls on the European Banking Authority to respect these mandates;

As of today, the implementation of the final Basel III standards by the United States (US) is uncertain; the United Kingdom (UK) has also delayed its entire package, in response to the US uncertainty. The EU should not engage in a race to the bottom. Nonetheless, we must also consider the international level playing field, particularly in those areas prone to international competition, such as those related to global financial market activities. Subsequently, in consideration of this matter, the Commission has taken a number of stances, namely:

20. Notes that even within the existing regulatory framework the banking sector has shown its resilience during the market events of recent years, and that the average Common Equity Tier 1 ratio has remained at high levels, at 15.81 %;

On liquidity issues, specifically the Net Stable Funding Ratio (NSFR) treatment of reverse repos, the Commission has proposed to prolong the current prudential approach, also beyond 28 June 2025. The current approach seems prudent, supports EU capital markets, and aligns the Union with other major Basel jurisdictions' practices in this area for sovereign debt. In 2025, the Commission put forward a targeted legislative proposal and welcomes co-legislators’ swift agreement.

21. Notes that the non-performing loans ratio has remained stable at 2.30 % and the liquidity coverage ratio at 159.39 %;

On market risk, on 24 March, the Commission published a targeted consultation setting out several options for the prudential treatment of market risk (FRTB). These include a further one-year postponement of FRTB implementation, or the introduction of temporary and targeted amendments. The majority of stakeholders prefers to delay the application of the EU’s framework for market risk prudential requirements for EU banks by another year, until January 2027. The Commission will communicate its decision on this in the coming days.

22. Notes the varying levels of exposure to non-performing loans and recalls that there are Member States which have exposure levels in the order of 1 % or even lower, while other Member States have exposure levels exceeding 4 %; considers that efforts to reduce European banks’ exposure to this type of loan should continue as good risk management practice;

~~On equivalence, together with the European Banking Authority (EBA), the Commission is continuing to monitor the existing equivalence conditions for third countries.~~

23. Highlights the fact that adverse macroeconomic conditions, geopolitical headwinds and the rapid development of deferred payment services may lead to a deterioration in asset quality and affect the level of non-performing loans in the future; highlights, therefore, the importance of prudent risk management and appropriate provisioning;

In paragraph 19, the European Parliament expresses concern about the growing number of bank branch closures, which could lead to the creation of 'bank deserts' and disproportionately affect vulnerable citizens who lack digital access. It emphasises the crucial function of smaller banks in delivering vital services in rural and remote regions, and in supporting local communities and SMEs. It acknowledges that high supervisory and regulatory costs pose a challenge to these banks, and it advocates proportional regulation that takes into account their size, risk profile, business model and territorial importance. Furthermore, the European Parliament calls on the Commission to consider whether banking regulation should take into account the size of smaller credit institutions, with the aim of making the system more proportionate.

24. Notes that the current levels of banking sector profitability may provide an opportunity for an increase in macroprudential buffers and help to preserve banking sector resilience; invites the Commission to further explore this option and carefully evaluate how to revise the macroprudential framework, taking into consideration the potential impact on capital requirements and bearing in mind a level playing field with other jurisdictions;

The Commission acknowledges that application in the EU of the same set of rules to all EU banks is necessary to provide a level playing field in the single market and to ensure all banks are resilient in times of crisis (i.e. to prevent a flight to safety at larger banks). Proportionality is a key principle in the regulatory framework and there are already lighter rules for Small and Non-Complex institutions (SNCI). Under the Banking Package, the EBA has a mandate to reduce reporting requirements, at least for SNCI. EBA has also received a mandate in the Banking Package to do a report on proportionality by 31 December 2027.

25. Notes that the banking sector plays a role in supporting the transition to a digitalised and carbon neutral economy, in channelling funds to renewable energy sources and in supporting the achievement of the objectives of the EU Green Deal and the EU Climate Law;

In paragraph 20, the European Parliament recalls that the Banking Package contains a high number of mandates to the European Banking Authority; calls on the European Banking Authority to respect these mandates.

26. Notes that the ECB takes account of climate- and nature-related financial risks in its supervisory practices and monitors growing physical and transition risks closely;

The Commission notes that the European Parliament and the Council agreed on those mandates, including on their prioritisation, during the negotiations on the Banking Package. EBA is continuing to provide information on its implementation of the mandates through its Roadmap. The Commission is engaging with co-legislators to ensure a further prioritisation of the mandates.

27. Welcomes the idea of increasing venture capital and unlocking capital to finance fast-growing companies in the EU; notes Commission President Ursula von der Leyen’s commitment to put forward risk-absorbing measures to make it easier for commercial banks, investors and venture capital to finance fast-growing companies; notes that this must be done in a way that does not pose a systemic risk or moral hazard;

In paragraph 25, the European Parliament stresses that the current profitability levels in the banking sector may offer a window of opportunity to strengthen macroprudential buffers and support the sector's resilience; calls on the Commission to further examine this possibility and thoroughly assess options for revising the macroprudential framework, while considering the potential implications for capital requirements and ensuring a level playing field with other jurisdictions.

28. Welcomes the creation of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism, which will allow more effective ways to combat money laundering and terrorist financing via direct supervision of certain financial entities and better cooperation, a better flow of information between national authorities and better coordination among sanctions enforcement authorities in Members States to help close gaps in the implementation of targeted sanctions;

The Commission notes that bank profitability levels have improved significantly in recent years, in part thanks to the increase in interest rates. The Commission further notes that European banks are showing significant levels of overall resilience, when considering all microprudential and macroprudential requirements that are in application. Basel III standards have been implemented as of 1 January 2025 in the EU and are being broadly applied to all EU banks. In recent years macroprudential space has increased, as macroprudential policy has tightened in most Member States.

29. Stresses the need to enhance the resilience of non-bank financial intermediaries, including by designing specific regulatory and supervisory tools; points out that such measures must guarantee the security of the financial system and be in the best interests of the customer; welcomes the Commission consultation on macroprudential policies for non-bank financial intermediaries; supports the Eurosystem’s recommendation to introduce system-wide stress tests to identify and quantify risks to the resilience of core markets; invites the Commission to investigate whether there are any gaps in the supervisory toolkit, including in relation to potential liquidity crunches and implications for systemic risk;

In paragraph 26, the European Parliament notes that the banking sector has a key role in facilitating the transition to a digital and carbon-neutral economy by directing investments toward renewable energy and contributing to the goals of the EU Green Deal and the EU Climate Law

30. Notes that crypto-assets create new challenges and opportunities for the financial system but also pose risks to it, and that these require attention from the national supervisors, the SSM and the European Systemic Risk Board;

The Commission fully agrees with the position of the European Parliament. The Commission recognises the crucial role of banks as financial intermediaries in channelling funds to the European economy. The Commission therefore encourages banks to focus their efforts and actively contribute to essential investments in strategic sectors as mentioned in the SIU Communication and in the Competitiveness Compass. As set out in the mentioned communication, the Commission will provide guidance on the use of favourable prudential treatment for investment under legislative programmes.

Resolution

In paragraph 30, the European Parliament stresses the need to enhance the resilience of non-bank financial intermediaries, including by designing specific regulatory and supervisory tools. It welcomes the Commission’s consultation on macroprudential policies for non-bank financial intermediaries and supports the introduction of an EU system wide stress test exercise aimed at identifying and assessing key risks across sectors and markets. The European Parliament invites the Commission to investigate whether there are any gaps in the supervisory toolkit for non-bank financial intermediaries.

31. Recalls that the position adopted by Parliament in April 2024 on the crisis management and deposit insurance framework ensures a more consistent approach across all Member States to the application of resolution tools and deposit protection to enhance financial stability, taxpayer protection and depositor confidence; notes that small banks have some specificities that may warrant a proportionate approach; stresses that European and national competent authorities should have at their disposal appropriate and sufficient tools to respond effectively to bank failures and safeguard financial stability, and that banks need to operate in an effective regulatory environment that fosters their development;

The Commission welcomes the position of the European Parliament on strengthening the resilience of non-bank financial intermediaries and its favourable view on the public consultation conducted by the Commission. There is widespread agreement among stakeholders that we need to better understand how non-bank financial intermediaries and banks interact in core funding markets. A system-wide risk assessment is one of the options that received widespread support, including from the European Parliament, Member States and other stakeholders. The feedback from this public consultation will inform the Commission’s future work on scope, timing and priorities for drawing up a macroprudential strategy on non-bank financial intermediation.

32. Highlights the importance of preserving shareholders’ and creditors’ primary responsibility for bearing losses in the event of a bank’s failure; stresses that resorting to using taxpayers’ money must be avoided, which is still a key lesson learned from the global financial crisis; stresses that the bail-in of shareholders and creditors must remain the main source for resolution financing before any recourse is made to industry-funded sources;

~~Resolution and deposit insurance~~

33. Recalls that a sufficient minimum requirement for own funds and eligible liabilities (MREL) is crucial for a credible resolution framework and for ensuring that resolution authorities have sufficient flexibility to effectively apply the resolution strategies needed in a specific crisis situation; underlines that this minimum requirement should be sufficient to effectively implement any of the resolution strategies included in a bank’s resolution plan; recalls that the resolution framework should avoid undue increases in MREL calibration and disproportionate contributions to the Single Resolution Fund;

With regard to the Banking Union, substantial progress has also been made in establishing the Banking Union, increasing resilience in the sector, supporting integration and boosting international competitiveness. However, the Commission agrees with the European Parliament that Banking Union remains incomplete, notably in the absence of adequate arrangements for managing the failure of mid-sized banks and a European deposit insurance framework. While this is the case, the EU safety nets remain fragmented (paragraph 32).

34. Stresses that if a bank’s eligible liabilities are issued to non-EU investors, the write-down or conversion of these liabilities should be enforceable with full certainty to safeguard the effective application of resolution tools;

In April 2023, the Commission put forward legislative proposals to review the existing framework for crisis management and depositor protection, with a goal of ensuring more consistent approaches across all Member States towards the application of resolution tools and deposit protection to the benefit of financial stability, taxpayer protection and depositors’ confidence. The Commission takes note of the position of the European Parliament as adopted in 2024. Negotiations in trilogues are ongoing. The Commission invites the co-legislators to address shortcomings in arrangements to manage the failure of mid-sized banks by agreeing on an ambitious outcome in the crisis management and deposit insurance framework negotiations. The Commission continues to provide its full support in this process. (paragraph 32,36).

35. Notes that any reliance on taxpayer money for the resolution of banks, including for liquidity support, should be avoided, in keeping with the principles of fiscal and social responsibility and market discipline;

A bank's internal loss absorption capacity must remain the primary tool to fund the handling of that bank's failure. The Minimum requirement for own funds and eligible liabilities (MREL) buffers held by the bank and, once they are depleted, liabilities of other creditors can be used to absorb losses up to the threshold of 8%. MREL is and will remain the first line of defence to ensure that the bank will have sufficient own internal resources to pay for the cost of its failure. The condition of the minimum bail-in of 8% to access the resolution fund remains in place. However, experience has shown that for certain banks with a high prevalence of deposits, meeting the 8% condition may result in losses on depositors, which in turn may negatively affect the community, depositor confidence and financial stability. The crisis management and deposit insurance proposal reforms the use of the funds from national deposit guarantee schemes in resolution, including, under certain conditions, as a ‘bridge' to meet the 8% condition, in order to shield depositors from bearing losses. This added flexibility is put forward with strong safeguards (paragraphs 33,34).

36. Recalls that banks need to continue to meet their obligations and perform their key functions after the implementation of a resolution decision;

The Commission agrees with the European Parliament that if a bank’s eligible liabilities are issued to non-EU investors, the write-down or conversion of these liabilities should be enforceable with full certainty to safeguard the effective application of resolution tool. The Commission has done substantial work, in particular within the Financial Stability Board, to ensure that the write-down and conversion of liabilities issued to non-EU investors can be done with legal certainty, and is committed to continuing this work.[1] (paragraph 35)

37. Recalls the importance of clarifying the role of the ECB as liquidity provider in resolution, paying due attention to appropriate guarantees and the ECB’s mandate;

With regard to the provision of liquidity in resolution, the Commission notes that in 2018 the Eurogroup provided broad support for the assessment of the Commission that there are limitations in the current framework which may hamper its effectiveness. No agreement on consensus solutions has been reached since then (paragraph 38). The Commission keeps assessing with the relevant stakeholders how to address this important issue going forward.

38. Underlines the SRB’s announcement that it will enhance its capabilities for launching enforcement action to remove substantive impediments to resolvability; calls for the publication, at the end of each resolution planning cycle, of an anonymised list of identified impediments to resolvability and the actions adopted to address them;

The Commission welcomes the fact that the previous European Parliament was willing to move forward with the European Deposit Insurance Scheme (EDIS) proposal. Upon completion of negotiations between co-legislators on the crisis management and deposit insurance framework, the Commission will follow with decisive steps to develop further the Banking Union, including by identifying a way forward on the European Deposit Insurance Scheme, considering discussions held so far based on the Commission proposal (paragraphs 44,45,46).

39. Welcomes the ‘SRM Vision 2028’ strategic review initiated by the SRB to set its long-term goals, address new challenges and further strengthen collaboration with the national resolution authorities and other stakeholders; notes, in particular, the SRB’s intention to identify areas where sustainability can be embedded further in its daily operations and core business; highlights the need to ensure efficiency and cost-effectiveness in the implementation of the new strategy;

~~[1] 2024 Resolution Report: From Lessons to Action: Enhancing Resolution Preparedness (in particular section 3.3 (pp. 11 et seq.)~~

40. Welcomes the SRB plan to streamline the annual resolution planning cycle to ensure that it is increasingly efficient and has a greater focus on testing banks’ resolvability and the operationalisation of resolution strategies;

41. Welcomes the fact that the Single Resolution Fund has now been built up; calls for the full ratification of the Amending Agreement to the ESM Treaty by all Member States, including the establishment of a common backstop to the Single Resolution Fund;

42. Highlights the need for additional efforts to ensure full resolvability for all banks falling under the scope of resolution; recalls that achieving resolvability cannot be considered a ‘moving target’ and therefore calls for more standardisation and harmonisation of the resolvability assessment; recalls, nonetheless, the important role played by national resolution authorities in the assessment of resolvability;

Deposit insurance

43. Underlines the fact that the Commission’s proposal to establish a European deposit insurance scheme was published back in 2015 and that the landscape has changed significantly since then;

44. Recalls that the position of its Committee on Economic and Monetary Affairs on a European deposit insurance scheme was adopted in April 2024; notes that that position deviates from the Commission’s 2015 proposal and adopts a new approach; is waiting for, and encourages the Council to move forward with, the negotiations on a European deposit insurance scheme;

45. Notes that national deposit guarantee schemes were introduced successfully and have proved their functionality in a number of cases; underlines the need to take specific national characteristics into account and to preserve the well-functioning systems for smaller banks that are already in place in some Member States, such as institutional protection schemes, in a way that ensures a level playing field across the BU;

° °

46. Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the Single Resolution Board and the European Banking Authority.

EXPLANATORY STATEMENT

While the Banking Union – annual reports 2022 and 2023 focused on the war in Ukraine and the ongoing Russian aggression against Ukraine, this report focuses more on the challenges for the EU and for the European Parliament, as mirrored in the new mandate of the Commission, namely the EU priorities to foster competitiveness, to strengthen the European single market and to boost economic growth.

The Union is currently at a turning point, which will determine the economic future in the upcoming decades. The 2024 reports of Enrico Letta and Mario Draghi underline that the EU needs a major turnaround to be able to compete with the US or China. Against this background, the Banking Union is a major cornerstone of competitiveness. A strengthened Banking Union will enable the EU to generate the necessary capital to make the European economy fit for the future.

EU banks play a key role in financing the required investments since bank loans are still the most important source of external financing for companies. However, EU banks suffer from a lower profitability compared to their US counterparts caused by too many regulatory hurdles and by an incomplete Banking Union. A robust and competitive banking sector is necessary to finalise the BU. In the last year, while co-legislators made much progress on crucial legislation for the Banking Union, the EU still has to monitor closely if the EU economy, EU citizens and EU banks benefit from those adopted proposals. This report provides realistic and achievable recommendations, which could help to strengthen further the Banking Union.

However, not only EU businesses need better access to capital. EU citizens are currently struggling to afford housing or to finance investments in sustainable renovations. It is therefore crucial to boost the profitability of EU banks, since this would in turn allow them to provide private households with better and easier access to affordable loans.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that he received input from the following entities or persons in the preparation of the report, prior to the adoption thereof in committee:

Entity and/or person

Permanent Representation of the Federal Republic of Germany to the European Union

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that he has submitted to the concerned natural persons the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE

Date adopted

19.3.2025

Result of final vote

–:

Members present for the final vote

Georgios Aftias, Rasmus Andresen, Francisco Assis, Isabel Benjumea Benjumea, Stefan Berger, Damian Boeselager, Giovanni Crosetto, Fabio De Masi, Engin Eroglu, Markus Ferber, Jonás Fernández, Dirk Gotink, Michalis Hadjipantela, Eero Heinäluoma, Billy Kelleher, Kinga Kollár, Tomáš Kubín, Aurore Lalucq, Rada Laykova, Marlena Maląg, Jorge Martín Frías, Fulvio Martusciello, Siegfried Mureşan, Fernando Navarrete Rojas, Denis Nesci, Luděk Niedermayer, Ľudovít Ódor, Nikos Papandreou, Gaetano Pedulla’, Lídia Pereira, Kira Marie Peter-Hansen, Pierre Pimpie, Evelyn Regner, Jussi Saramo, Paulius Saudargas, Ralf Seekatz, Irene Tinagli, Johan Van Overtveldt, Lara Wolters, Stéphanie Yon-Courtin, Roberts Zīle

Substitutes present for the final vote

Matthias Ecke, Fernand Kartheiser, Martine Kemp, Morten Løkkegaard, Tsvetelina Penkova

Members under Rule 216(7) present for the final vote

Valérie Devaux, Sebastian Kruis, Jana Nagyová, Stanislav Stoyanov, Flavio Tosi

FINAL VOTE BY ROLL CALL BY THE COMMITTEE RESPONSIBLE

Key to symbols: