Single Market in Banking 2027: What the Commission Wants to Release, and Who Can Stop It

On 17 July 2026 the European Commission adopted a communication on the competitiveness of the banking sector and the single market in banking, filed as COM(2026) 615 final. It delivers on a commitment made in the Savings and Investments Union (SIU) strategy. Anyone looking for draft legislation will find none. Concrete proposals arrive only with a banking package in the first quarter of 2027.

The document is therefore a stocktake with an announcement attached. It still repays reading for treasury and strategy functions, because it reveals two things: which capital lock-up the Commission considers avoidable, and which objections it already knows about.

The €230bn belongs to the ECB, not the Commission

The figure travelling through the coverage deserves careful attribution. The document states: “The ECB estimates that removing constraints to the liquidity in subsidiaries of EU banking groups would free up around EUR 230 billion of high-quality liquid assets.” This is therefore an estimate by the European Central Bank that the Commission quotes. It comes from the ECB's response to the Commission consultation on the competitiveness of the EU banking sector.

What the figure measures matters just as much. It captures high-quality liquid assets alone, trapped by requirements applied at subsidiary level. Capital does not appear in the €230bn. Read as an overall easing of own funds requirements, the number is badly overstated. For a treasury function sizing the effect on its own balance sheet, that is the difference between a liquidity question and a capital question.

The proposal and the contradiction built into it

The heart of the communication reads plainly: “Group-wide supervisors should have the power to ensure that capital and liquidity requirements are met at the level of the parent entity in groups that operate cross-border. The power should also trigger the legal obligation for the parent to move resources to its subsidiaries.” Group-wide supervisors would therefore be able to enforce compliance at group level, and in return the parent would carry a legal duty to move resources to its subsidiaries.

The Commission spells out the counter-position in the same document. A dedicated section on safeguards records the concern that subsidiaries could be left without sufficient parent support in a crisis, while national authorities have to manage the failure. It names resolution through a single point of entry and the resilience of national deposit guarantee schemes under local shocks.

The Commission is describing a tug-of-war that has run for years: home supervisors want group-level management, host supervisors want local cover. No member state is named as a blocker. Anyone assessing the timetable to 2027 should read the safeguards section, because that is where the negotiation will stick.

What the Commission intends to review

Alongside the liquidity question, the communication announces a series of reviews that bear on capital planning. The Commission intends to assess the impact of the Basel output floor and its transitional arrangements on unrated corporates and mortgage lending, expressly with an eye to specialised lending, project finance and trade-related finance. It plans to revise the prudential treatment of investments in software assets and to examine the effectiveness of current remuneration rules.

A reporting theme comes with a solid baseline. Total reporting costs are estimated at roughly €11.2bn a year, and the number of reporting data points is to fall by half. That announcement lands directly on reforms already under way in supervisory reporting and deserves a check against internal projects.

Mergers: enforcement rather than a new instrument

On cross-border consolidation the communication is more restrained than the coverage suggests: “The Commission is committed to continue using its enforcement toolkit where there is breach of Union law, notably on mergers and acquisitions.” It adds that the Commission is revising its merger control guidelines.

This means firmer enforcement of law already in force against unjustified national intervention. No new power of prohibition emerges. The link to UniCredit's approach to Commerzbank is drawn by the press; the case does not appear in the document. Germany rejected the offer in June 2026, officially citing price concerns and Commerzbank's role as a lender to German corporates. Anyone drawing that connection should mark it as commentary.

The response from Germany

The German Banking Industry Committee responded the same day. Daniel Quinten, a member of the board of the National Association of German Cooperative Banks (BVR), offered agreement with a caveat: “Die Europäische Kommission benennt zwar wesentliche Problemfelder zutreffend, wozu zum Beispiel die übermäßige Komplexität der regulatorischen Anforderungen und die besonderen Belastungen für kleine, risikoarme Institute zählen. Konkrete Maßnahmen zur Beseitigung dieser Probleme sowie der bekannten Wettbewerbsnachteile durch steigende europäische Kapitalanforderungen kommen hingegen zu kurz oder bleiben zu vage.” In substance: the problem statement lands, the remedies fall short or stay vague.

Daniel Quinten also warned against overloading the coming package, arguing that the competitiveness of European banks belongs at the centre of the legislative proposals and should not be tied to further policy agendas. For smaller institutions this is more than an association position. The communication itself identifies burdens on small, low-risk firms as a problem, and whether the 2027 package turns that into relief will be settled in a process that is only beginning.

What this means in practice

Four starting points for treasury, capital planning and strategy arise before any legal text exists.