As the European Commission prepares the next generation of EU banking rules under the Savings and Investment Union, this position paper from the FEBEA Advocacy Lab sets out recommendations for a banking framework that strengthens Europe’s competitiveness by supporting the real economy, preserving financial stability and financing the green and just transition.

The paper argues that competitiveness should not be understood as bank profitability alone, but as the capacity of the banking sector to remain resilient, allocate capital to productive investment and contribute to Europe’s long-term economic, environmental and social objectives. It highlights the role of ethical and sustainable banks in financing SMEs, the social economy, local communities and sustainable projects, and calls for a regulatory framework that better reflects the diversity of Europe’s banking sector through a more proportionate approach.

Building on the strengths of the existing prudential framework, the paper proposes targeted improvements rather than a broad deregulatory reform. It concludes with five recommendations to improve proportionality for small and non-complex banks, simplify reporting and supervision, strengthen climate and transition risk management, and ensure that the regulatory framework better supports resilient, community-rooted banking models and the financing needs of the real economy.