ContextOpening remarks by Joachim Nagel, President of the Deutsche Bundesbank, at the OMFIF (Official Monetary and Financial Institutions Forum) Roundtable “Future of banking: Europe’s strategic banking challenges”, London, 1 October 2026.
Why it mattersTies European bank competitiveness to deeper capital markets and simpler, more proportionate regulation ahead of new EU proposals planned for 2027.
- European banks lag on profitability and market valuation compared with peers.
- The financial system is still too fragmented to channel Europe's large investment needs.
- Regulation is complex and weighs heavily on smaller banks.
- Deepen venture capital and securitisation markets and encourage more capital-market investment by households.
- Move towards more integrated cross-border services and supervision.
- Simplify the rulebook significantly and make it proportionate for smaller banks.
Read the speech summary
1. Sound banks
Speaking at the Saddlers' Hall in London, home of a craft guild founded in 1395, Bundesbank President Joachim Nagel used the guild's motto about riding securely to discuss how firmly European banks sit, how they fare against foreign rivals and what would help them. Unlike in 2008, they weathered the pandemic and the 2023 turmoil, which he credits to post-crisis capital rules: studies by Basel, ECB and Bundesbank experts show stronger capital improves stability, lending and growth over the cycle.
2. How they compare
Direct competition with US banks is limited to investment banking and trading; corporate lending in Germany is contested mainly among European lenders. US and UK banks still earn higher margins and trade at higher valuations, although European bad loans and cost ratios keep falling. Research finds more capital does not hurt efficiency but cuts funding costs; the real drag is Europe's fragmented banking and capital markets and divergent national rules.
3. Three remedies
He wants more integrated, deeper capital markets through venture capital, securitisation, more retail investment, cross-border services and joint supervision of market infrastructure, which would also give banks scale. He backs simpler EU rules, expected in proposals early in 2027, but insists that integration measures favouring big cross-border banks be matched by lighter, proportionate requirements for small banks. And he warns that non-banks, now holding half of financial assets, are closely tied to banks (14% of German banks' assets are claims on them), so lenders must manage private-credit exposures carefully.