[check against delivery]

Good morning, good afternoon and good evening, whatever the case may be. It is a pleasure to be with you today.

We are living through unprecedented times: a pandemic that is forcing us to adapt how we live and work.

A rising tide of COVID-19 infections has forced governments across the world to impose wide-ranging restrictions.

As a consequence, the EU economy is expected to contract by more than 8% this year, according to the Commission’s forecast.

The outlook for next year remains uncertain, though there is promising news on vaccination.

As the President of the ECB recently put it: “From a huge river of uncertainty, we see the other side now.”

We have an opportunity to use this crisis to build a stronger, more competitive banking sector that serves a sustainable European economy.

[Immediate COVID-19 response]

What we know for sure is that banks have and are playing a key role in managing the COVID-19 crisis.

When the pandemic hit, they were well capitalised and more resilient, thanks to the reforms carried out in the wake of the last financial crisis.

This allowed them to be part of the solution to this crisis. They continued to lend to the real economy and supported households and businesses with essential financial services – sometimes in completely new ways. Banks are at the core of the response.

The actions of banks were facilitated by swift and coordinated policy action by public authorities.

Regulators and supervisors at national, EU and global levels have provided flexibility to enable banks to continue lending.

Supervisors, for example, swiftly granted temporary relief to banks, and invited them to use their capital and liquidity buffers.

The Commission, for its part, confirmed the flexibility embedded in the prudential and accounting rules with an Interpretative Communication. This was important, to give as much certainty as possible to banks.

The Commission also proposed the CRR “quick fix”: targeted and temporary amendments to the prudential framework.

These changes were quickly adopted by the EU co-legislators in an extraordinary effort to ensure their application during the first phase of the COVID crisis.

Banks have to make use of these adjustments to ensure that credit continues to flow into the real economy where it is needed.

Flexibility and targeted relief have rightly been the key priorities so far.

Recent market observations seem to confirm that our policy responses have contributed to the continued provision of credit to the real economy, alongside the actions taken by Member States and central banks since the beginning of the pandemic.

[Upcoming NPL challenge]

Today, the financial health of EU banks remains strong.

But we need to remain vigilant, as potential financial difficulties faced by businesses and households may only become apparent with a certain time lag.

So banks need to be prepared to address a possible deterioration in asset quality next year.

The various support and relief measures have bought us some time. Now we have a window of opportunity to act and be ready to address a possible accumulation of non-performing loans.

History has taught us that it is better to deal with NPLs early.

Only proactive and responsible action can ensure that banks continue to play their key role in supporting the economic recovery.

Of course, banks need to have the right tools to address rising NPLs.

To complement the existing toolbox, the Commission has proposed targeted amendments to the securitisation framework, which should free up lending capacity and facilitate the disposal of NPLs.

Co-legislators are dealing with these proposals as a matter of priority.

But we want to make sure that we are as collectively prepared as we can be.

That’s why we will very soon publish a Communication on a new comprehensive NPL strategy, outlining the actions that need to be taken.

Member States, EU authorities and the private sector need to cooperate closely.

We’ll rely on a mix of complementary policy actions, especially in two areas:

  • reform of insolvency and debt recovery frameworks;
  • and the further development of secondary markets for NPLs.

[Structural challenges remain]

Beyond the crisis response and the recovery, we must continue our work on long-term, structural issues.

COVID-19 did not erase or reverse the structural, long-term challenges that we were facing before the crisis.

The deficiencies that led the EU and its international partners to reform the financial regulatory architecture after the global financial crisis are, in part, still present.

By building the first two pillars of the Banking Union, we have made great strides towards transforming the European banking sector from a shock amplifier into a shock absorber.

Completing the Banking Union to reap its full potential remains a priority for us.

In a context where profitability continues to be a challenge, addressing the fragmentation of the markets on which banks operate remains a priority.

Finally, the COVID-19 crisis cannot be used to delay action on climate change and the green transition. It is an opportunity and a necessity to accelerate the work on sustainable finance.

Let me start with the completion of the post-crisis framework and, in particular, the finalisation of Basel III.

[Finalisation of Basel III]

Given the COVID crisis, we postponed the implementation of the final elements of Basel III in the EU, in line with the one-year delay agreed by the Basel Committee.

It is only logical to free up the operational capacity of banks, regulators and supervisors to address the immediate threat in times of crisis.

However, our commitment to implement these reforms faithfully in the medium to long term has not changed.

Nor has it changed our commitment to take into account certain EU specificities, in particular related to the current challenges, while preserving the integrity of the overall framework.

But lowering the prudential standards – via, say, a completely diluted implementation of Basel III – would not address the sector’s enduring profitability problem.

It might offer some short-term relief, but it would put at risk the resilience and stability of the sector, and could prevent banks from being part of the solution when the next crisis strikes.

And the issues that the final Basel III rules address remain as relevant as ever, notably doubts about the reliability of internal models.

However, what has changed is the starting point from which banks will have to implement the final elements of the reforms.

As we stated publicly in our Communication of April 2020, we will take into account the impact of the COVID-19 crisis on banks’ financial situation in the impact assessment that will accompany our legislative proposal.

To that end, we have asked the European Banking Authority to update its analysis in light of COVID-19.

This is not an easy exercise given the current uncertainty. So we have invited the EBA to present the impact of the reforms in a baseline and a more severe macroeconomic scenario.

I understand the EBA will deliver its findings in the coming days. These will feed into our own impact assessment. Our current working assumption is that we will adopt a proposal in the second quarter of next year.

In the EU, we want to maintain a multilateral approach to solving important global issues. That means that we implement solutions agreed at international level. Only then can we expect our international partners do the same.

[Completing Banking Union]

Looking ahead, the completion of the Banking Union remains another key priority, one which is long overdue.

The early introduction of the common backstop to the Single Resolution Fund has been agreed.

At the same time, an agreement on the creation of a European Deposit Insurance Scheme, or EDIS, is still proving elusive.

As long as deposit insurance schemes are present only at national level, the EU banking sector will remain fragmented.

Completing the Banking Union by establishing EDIS would be the most direct route to foster market integration.

The benefits of these initiatives, combined with an improvement of the crisis management framework, are even more evident than before.

[Deepening the Capital Markets Union]

Let me now say a few words on the Capital Markets Union.

Developing our capital markets now, at a time of crisis, matters more than ever.

Why? To stimulate financing around Europe. More financing opportunities to let start-ups grow, to help larger companies thrive, to create more opportunities for Europeans to invest safely for their future.

Over the past 5 years, we have made progress but we need to go further still.

The CMU project is also an opportunity for our banks.

For European investment banks, the current fragmentation of European capital markets means that market activities such as origination, distribution and market making may not be sufficiently profitable.

There are also broader motivations for the CMU: to get more funding for the green and digital transitions, to help the economy adjust towards sustainable growth and a challenging global environment, and to strengthen the international role of the euro.

In the Action Plan published two months ago, we have presented 16 initiatives to achieve these objectives. Let me just name a couple of them:

  • Creating a single access point to company data for investors;
  • Supporting insurers and banks to invest more in EU businesses;
  • Strengthening investment protection to support more cross-border investment in the EU.
  • Facilitating monitoring of pension adequacy across Europe;
  • Making insolvency rules more harmonised or convergent;
  • Pushing for progress in supervisory convergence and consistent application of the single rulebook for financial markets in the EU.

Next year, we will propose legislation to achieve these objectives.

We know that moving up to the next level will not be easy. But our recovery will be far more robust and lasting if we do.

[Renewed Strategy on Sustainable Finance]

Last but not least, I would like to touch on the crucial role of banks in the transition to a more sustainable future.

Rightly, the COVID-19 crisis is not being used to delay action on climate change and the green transition.

The commitment to the European Green Deal remains strong, to help us tackle climate and environmental challenges and stimulate sustainable growth and recovery.

It is important that banks and the financial industry at large join these efforts for a sustainable recovery. Only then will we be able to reach the necessary scale to transform the economy.

From a regulator’s perspective, one essential step is for banks to incorporate sustainability considerations in their risk management.

In the last review of the Capital Requirements Regulation and Directive, environmental and social considerations were integrated in bank prudential regulation for the first time.

The EBA is analysing how the environmental and social impact of banks’ activities can be reflected in capital requirements, and how climate risks can be integrated in the supervisory review of banks’ risks.

And large banks will have to disclose their environmental and social risks.

This is a first, significant step in the direction of more climate-conscious banking regulation.

Sustainable finance needs to become mainstream to have a transformative impact on society and on the planet, while also generating strong returns.

In early 2021, the Commission will launch a renewed sustainable finance strategy. It will include well-defined goals with clear deadlines to ensure we stay on the right path.

Public feedback so far, including from the banking sector, confirms broad support for our ambitious plans.

We are already developing the sustainable finance taxonomy, sustainability disclosures by companies and investors, climate benchmarks and upcoming measures for green bonds and ecolabels for investments.

Europe cannot do it alone. That’s why we are working with the International Platform on Sustainable Finance, which represents more than half of the world’s emissions, population and economy.

And we hope that the incoming administration in the US will support the sustainable finance agenda as part of the President-elect’s clear commitment to tackling climate change. 

A strong regulatory and policy framework, which the revised Sustainable Finance Strategy will provide, will ensure that money flows towards sustainable projects.


We have an opportunity at this moment: responding to the COVID challenge has put a renewed focus on the health of our banks.

The banking sector in Europe must remain part of the solution, as it has been during COVID. We need to make sure that it does not become part of the problem in any future crisis.

We still have long-term structural issues to address. That’s why we need to use this crisis as a chance to finally complete the Banking Union. And why we cannot use the crisis as an excuse to avoid living up to international agreements.

Beyond the resilience of banking sector itself, there are a number of important developments in the financial system that will have an impact on banks.

Developing the Capital Markets Union is more important than ever.

And the transition to a sustainable economy is vital. It needs everyone – banks, companies, regulators, supervisors – to participate to meet our ambitious climate and environmental goals.

Thank you very much for your attention, and the opportunity to join you in this interesting forum.