The EU is looking to ease cross-border capital movements in a bid to keep banks in the region competitive with the US, according to the Financial Times.

The paper saw a leaked draft of a European Commission report on EU banking competitiveness, which lays out plans to let banks more easily move funds between EU countries and overhaul “unduly complex and burdensome” regulation.

Specific changes would see banks given the freedom to meet capital and liquidity requirements on a consolidated, bloc-wide basis rather than being forced to meet the individual requirements for each local subsidiary.

European banks estimate that this could free up tens or even hundreds of billions of euros. In September 2025, for example, the Association for Financial Markets in Europe has previously argued that inconsistent rules on have “trapped” €250 billion in liquidity.

The European Commission is understood by the FT to favour balancing the new freedoms by mandating that parent companies will still need allocate funds to subsidiaries when required.

Under the plans, banks could also be given capital relief when lending to unrated companies. Under current Basel III rules, banks lending to companies without credit ratings or mortgage borrowers must apply higher capital requirements to cover the perceived risk.

Basel III was introduced in December 2010 and implemented in 2012. Reforms to the rules have been a topic of contention for years, with reforms to the regulatory framework first delayed to January 2026 and later to January 2027.

---