Irish Banks Ask EU Commission to Relax Post-2008 Capital Rules to Unlock Lending

Irish banks, through Banking & Payments Federation Ireland (BPFI), have written to the European Commission, requesting a relaxation of post-2008 financial crisis bank capitalisation rules. This move aims to unlock lending capacity for households and businesses, supporting economic growth, especially amid green and digital transitions.

BPFI argues that current rules, while ensuring resilience, have created unnecessary complexity and disproportionately affect smaller countries like Ireland. They advocate for a more efficient regulatory framework and consistent application of EU banking rules, rather than deregulation.

BPFI chief executive Brian Hayes highlighted that the EU remains a bank-based financial system where banks are crucial for financing the real economy. He noted that cumulative capital requirements since the financial crisis have added complexity with limited additional stability benefits.

A European Banking Federation study indicated that discretionary decisions by EU and national authorities added €273.2 billion in capital requirements, impacting financing capacity by an estimated €2.7-4.1 trillion. Supervisory discretion alone increased by over €100 billion (60%) between 2021 and 2024, despite minimum requirements remaining stable. The study concluded that the European banking system has achieved resilience far beyond original targets, with capital and liquidity ratios well above minimums in 2024.