To do this, on the banking side, it is important to eliminate national barriers to European banking integration. 5/9  Despite the challenges faced in recent years, with the emergence of new competitors and low levels of profitability, many European countries’ banking systems remain oversized and still have surplus capacity. In addition, international consolidation processes have been few and far between, and this pattern has not changed since the launch of Banking Union. This situation contrasts, once again, with the consolidation process in the United States following the removal of certain regulatory hurdles that restricted mergers and acquisitions between banks from different US States. In comparison, here in Europe barriers preventing a truly pan-European bank persist, especially in the retail business segment. These barriers are both explicit – different national regulations – and implicit. Thus, the use of directives that provide for national exceptions and specificities have not been sufficient to harmonise and standardise European banking regulations. Moreover, these regulations do not fully acknowledge the advantages of geographical diversification of banking activity. Also, in some European countries, there are still broad segments of the banking industry that are either fully State-owned or are sheltered from competition by means of specific regulatory treatment. They thus have fewer incentives to search for more profitable business options. Removing all these obstacles is essential to achieve greater risk diversification through the creation of cross-border banks.

22.02.2019  Banking Union: the challenge of going digital and being regulated Presentation of the PwC report Pablo Hernandez de Cos Governor  Let me begin by thanking PwC for their kind invitation to participate in this presentation of the Sixth Report on Banking Union. In recent years these reports have provided us with a detailed analysis of the challenges facing the Spanish financial sector as a result of having to adapt to regulatory changes and to the new institutional arrangements of Banking Union. And this against a background of far-reaching technological change, which has seen the emergence of new players (such as the fintech and the technological giants, the so-called bigtech). These agents are altering the competitive framework in some of the traditional business segments of banks. As on previous occasions, this year’s report is very complete and analyses key questions on new issues relating to regulation, to banking activity and to the environment banks face. Allow me to focus on two specific issues: the tasks outstanding regarding Banking Union and the technological challenge from a regulatory standpoint. These two issues are, moreover, interrelated. To successfully address the transformation imposed by the new competitive environment resulting from technological changes will probably require harnessing the opportunities of scale and specialisation that the integration of European financial markets offers. But to enable this process of integration it will be necessary first to remove the obstacles that continue today to block the way to the creation of Banking Union and the full Capital Markets Union.