The European Commission plans to reduce political interference in banking mergers and remove barriers to cross-border consolidation within the European Union, aiming to help European banks compete more effectively with larger U.S. financial institutions.
A report released on Friday said internal market obstacles have prevented EU banks from expanding across borders, leaving them smaller than their American counterparts. The Commission criticized national interventions in merger decisions, citing Germany’s rejection of UniCredit’s bid for Commerzbank as an example of how political considerations can hinder banking integration despite regulatory approval.
The Commission is expected to propose reforms in the first quarter of 2027, including stricter enforcement of EU merger rules, simplified capital and liquidity requirements for cross-border banking groups, and updated deposit insurance measures. The report estimates that easing current restrictions could unlock around €230 billion in liquid assets, although industry groups have called for additional regulatory reforms to strengthen the sector’s competitiveness.
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