Denis Beau: Unlocking the Banking Union - the endgame of simplification
Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Forum on Financial Supervision, Systemic Risk Centre, London School of Economics, London, 10 June 2026.
Simplification is an opportunity to support the EA banking sector's competitiveness and contribution to economic growth.
During the last fifteen years, the European Union has taken major regulatory and supervisory steps to enhance the stability and resilience to shocks of its banking sector within the context of the development of an EU banking Union. To that end, international standards from the Basel Committee and the Financial Stability Board have been transposed into EU law and implemented through the Single Supervisory Mechanism and the Single Resolution Mechanism, which stand as a European integration and cooperation success story. Well integrated cross border teams – Joint Supervisory Teams and Internal Resolution Teams – have concretely put into practice the founding texts, most recently with the entry into force of the banking package (CRR3/CRD6) and the upcoming CMDI reforms.
The European banking system is more robust than ever.
Resilience shows in the hard metrics. The average CET1 ratio of European banks rose from 12.5% to 16.3% between 2014 and 2025, while the non performing loan ratio fell from 6.5% in 2014 to around 1.8% in 2025, according to the EBA (Charts 1 and 2). The system also withstood the Covid 19 shock, the subsequent high inflation and interest rate cycle, and the 2023 banking turmoil – testimony to the resilience benefits of combined efforts of supervisors, regulators and the banking industry.