By Jesús Aguado
MADRID (Reuters) -Santander’s executive chair Ana Botin warned on Tuesday against overregulation of Europe’s banking sector, saying it would hurt economic growth, and urged European governments to allow companies to invest and be more innovative.
Botin’s comments come as European governments are debating whether to follow the Trump administration’s efforts to roll back rules introduced after the 2008 global financial crisis.
Policymakers are attempting to ensure innovation does not compromise banks’ soundness, while some argue that the regulatory burden is holding back spending.
“Regulation kills innovation … We need to understand that unless we allow companies to innovate, we are not going to grow,” Botin told the International Banking Conference in Madrid. “A lack of growth could be a problem for financial stability.”
DEREGULATION NOT ON THE AGENDA IN BRUSSELS, EIB CHIEF SAYS
Nadia Calvino, head of the European Investment Bank (EIB), told the conference that deregulation was not on Brussels’ agenda.
Botin said that without growth and profits, banks could not grow capital, highlighting the higher tax burden European lenders faced compared to their U.S. peers.
She also said that U.S. banks faced looser solvency requirements, with the gap between Europe and the U.S. expected to widen by 3.5 trillion euros ($4.08 trillion) over the next three years, allowing them to better support lending.
Botin’s comments contrast with calls last month from some top European central bankers to avoid easing bank regulation.
U.S. bank agencies are poised to unveil a more industry-friendly version of capital “Basel III Endgame” rules by the end of 2025 or early 2026.
NEW FORM OF MONEY
Fed Vice Chair for Supervision Michelle Bowman also told the event that it was important to separate digital assets, such as stablecoins, from banks’ regular business to “ensure soundness remains”.
Bank of England Deputy Governor Sarah Breeden said that “we must not, as we enable this new form of money, have a precipitous drop of credit.”
ECB policymaker Jose Luis Escriva said financial security must be maintained as new technology such as the issuance of stablecoins alters the market, adding that the central bank is “the lender of last resort, because it has the possibility of issuing money”.
($1 = 0.8575 euros)
(Reporting by Jesús Aguado; Additional reporting by Emma Pinedo in Madrid and Suban Abdulla in London; Editing by David Latona, Susan Fenton and Jan Harvey)
