Europe’s Banks Face Scale Challenges as EU Prepares Regulatory Revamp

European lenders are being held back by a “chronic lack of scale,” rather than high capital requirements, European Union officials said as they set the stage for a regulatory overhaul that is unlikely to include the capital reductions sought by some bankers. Bloomberg posted on X, that EU officials argued the sector’s structural limitations are a bigger drag on competitiveness than existing capital rules. The comments come as policymakers prepare changes to banking regulation, signaling that any revamp is expected to focus on broader structural issues instead of lowering capital requirements.