Bundesbank Backs Simpler EU Bank Rules, Opposes Deregulation Ahead of 2027 Commission Proposals

Key Takeaways

• Bundesbank official Michael Theurer argues in a Handelsblatt guest commentary that EU banking rules should be simplified and made more proportionate without lowering resilience standards.
• He supports cross-border group-level capital and liquidity management and a lighter framework for small, non-complex banks.
• The commentary signals the supervisory direction ahead of the European Commission's expected legislative proposals by early 2027, so compliance teams should begin planning now.

Deep Dive

Bundesbank official Michael Theurer argues in a Handelsblatt guest commentary that EU banking rules should be simplified and made more proportionate without lowering resilience standards. He supports cross-border group-level capital and liquidity management and a lighter framework for small, non-complex banks. The commentary signals the supervisory direction ahead of the European Commission's expected legislative proposals by early 2027, so compliance teams should begin planning now.

The commentary is a policy statement, not binding guidance, and it introduces no new requirements. It does signal how a key supervisor will approach the coming simplification debate. The central message is that simplification must not become deregulation. Prudential resilience built since the 2008 crisis is to be maintained, while overlapping requirements, reporting obligations, and supervisory processes are streamlined. Compliance teams should therefore not expect a general loosening of risk management standards. Expect instead a restructuring of how requirements are applied and reported.

Three themes are most relevant. First, the Bundesbank favors cross-border exemptions that let banks in the European Banking Union manage capital and liquidity at group level rather than holding separate buffers in each country. This would not need to wait for a European deposit guarantee scheme. It would be conditional on robust safeguards ensuring the foreign parent supports its subsidiaries in a crisis. Second, proportionality should align regulatory requirements, reporting, and supervisory demands with each bank's size, complexity, and risk profile, with significant simplification for small and non-complex institutions. Third, the author notes that supervisory treatment of areas where large banks compete globally could affect international competitiveness, and says the Commission should be more ambitious in some areas.

The key timeline is the European Commission's July 17 communication on banking sector competitiveness, which is expected to lead to legislative proposals by early 2027. The Bundesbank and Banque de France contributed proposals during the earlier consultation. The commentary also appeared in La Tribune on September 10. No compliance deadlines apply yet, and final rules will likely take considerably longer to be adopted and implemented.

Recommended actions: (1) Monitor the Commission's legislative proposals and track Bundesbank and ECB positions. (2) Inventory capital, liquidity, and reporting requirements that overlap or duplicate each other, to quantify potential benefits and inform consultation responses. (3) Cross-border groups should model the effect of group-level capital and liquidity management, and assess the intragroup support arrangements likely to be required as safeguards. (4) Smaller institutions should assess eligibility for proportionality regimes and the effect on reporting processes. (5) Maintain current risk management and resilience standards, since supervisors have signaled these will not be relaxed.

Risk implications: The main risk is planning on the assumption of deregulation, which this commentary contradicts. Transition risk arises from changes to reporting templates, supervisory processes, and intragroup arrangements. Parent support mechanisms may introduce new governance, recovery planning, and legal considerations. Uncertainty about final scope and timing argues for flexible, scenario-based planning rather than immediate system changes.

Source: Deutsche Bundesbank