Nicosia: The Cypriot banking sector has experienced a profound transformation since the financial crisis of 2013, evolving into a more robust and resilient entity that aligns with international standards, according to Wim Mijs, CEO of the European Banking Federation (EBF), in an interview with the Cyprus News Agency.
According to Cyprus News Agency, Mijs emphasized the sector’s substantial progress, notably the significant reduction in non-performing loans (NPLs), a comprehensive overhaul of Cyprus’s anti-money laundering (AML) framework, and the integration of digital technologies within banking services. However, he cautioned that Cyprus, akin to the rest of Europe, must remain vigilant against rising cyber threats, ongoing geopolitical instability, and growing competition from major tech companies.
Looking at the broader European context, Mijs highlighted the urgent need for a shift in regulatory perspectives to better enable banks to support growth and investment. This is particularly crucial as Europe confronts an annual investment gap of 800 billion pounds and new financial requirements in areas such as security and defense.
The EBF chief also underscored the necessity for tangible steps to advance the Capital Markets Union, thereby unlocking private capital to support Europe’s ambitions in green energy, digitalization, and defense.
In discussing the shift in regulatory mindset, Mijs expressed concern over the current tightening of credit conditions across the eurozone, just as inflation begins to ease and the European Central Bank signals potential interest rate reductions. He noted that while post-Global Financial Crisis reforms succeeded in enhancing bank resilience, they have created an overly complex regulatory framework that imposes significant constraints on profitability and economic financing capacity.
Mijs advocates for a policy shift to balance risk management with economic support, calling for reduced capital buffers that hinder lending and long-term investment, as well as revitalization of the European securitization market to unlock more capital. Simplifying the increasingly fragmented regulatory environment, particularly in areas like retail banking, digital finance, and cybersecurity, is essential for European banks to effectively support businesses and drive the EU’s transition to a more resilient and competitive economy.
Regarding the Capital Markets Union (CMU), Mijs stressed the importance of turning strong regulatory intentions into tangible outcomes. He highlighted the need for real incentives to make investment attractive, creating an ecosystem where long-term investing is appealing and accessible to ordinary citizens.
Mijs further noted that the European regulatory framework’s complexity is a hindrance, and streamlining regulation to improve competitiveness is a priority for the current legislative cycle. He emphasized the need to align regulation with competitiveness and sustainability objectives, while also reducing complexity in digital regulation to foster innovation and growth.
In conclusion, Mijs pointed out that the European Banking Federation is committed to ensuring that new regulations and omnibus packages are suitably designed for the entire European banking sector. He acknowledged the adoption of the Digital Operational Resilience Act (DORA) as a positive step but expressed concerns over the additional compliance burdens introduced by the Cyber Resilience Act (CRA), which did not exempt the financial sector.