Europe faces major challenges. The most critical and immediate is low growth and a lack of investment. Over the past 25 years, a gap of more than 30% has opened up between European and US productivity — a gap that is not merely theoretical, but strategic.

Europe’s stagnation is, to a large extent, the result of its own decisions, and it can be reversed by making different choices.

We need decisive action, with the right measures, delivered quickly and with real impact. In recent weeks, European leaders have met in Davos, at the informal European Council and at the Munich Security Conference to address these issues and put forward more concrete action plans.

However, we believe a key factor is being overlooked: how are we going to finance these challenges?

As part of Europe’s economic infrastructure, banks are the main financing channel, providing around 75% of credit in Europe to large corporates, SMEs and households alike. The banking system remains the most effective mechanism to mobilize private capital and respond swiftly to Europe’s challenges. With the right policies, banks could significantly increase support to individuals and businesses across Europe without compromising financial stability.

Across Europe, overtime, excessive caution and the complexity required to reach minimum-consensus agreements have led to an overly complex regulatory and supervisory system that hampers capital mobilization. The cumulative effect increases the cost of capital, creates fragmentation and legal uncertainty, and ultimately weighs on growth and international competitiveness.

This excessive complexity does not only affect the banking system. Heightened risk aversion is increasingly limiting investment in key sectors — from energy and telecommunications to high value-added technology industries — precisely at a time when Europe needs scale and speed.

We welcome the sense of urgency expressed by EU leaders last week and the plans to move swiftly forward with the Savings and Investment Union (SIU) before June this year. However, this alone will not be sufficient to unlock financing.

It will take time for these initiatives to translate into real investment. Investment needs must be addressed now, not in five years’ time.

It is therefore essential to prioritise the banking sector within the One Europe, One Market strategy at next month’s EU Council meeting. This can no longer be postponed. The same should apply in the UK, building for example on the Bank of England’s Financial Stability Report from December. These commitments must translate into concrete actions and meaningful changes in 2026.

What are the two key issues that require urgent solutions?

First, to rationalise and significantly simplify the capital framework imposed on banks. We must seize the opportunity to recalibrate it so that banks can channel the financing needed to support growth, without in any way jeopardising financial stability. This requires a careful assessment of where regulatory accumulation has exceeded underlying risks and adjusting requirements with growth in mind.

Second, to incorporate growth in Europe as a determining factor in banking regulation, alongside financial stability. The UK has recently taken positive steps by introducing a secondary mandate for growth and competitiveness, and this is already starting to deliver results. Ongoing changes in ESMA and EBA present an opportunity for the rest of Europe to follow suit, while the Bank of England’s capital review offers a chance to test the UK’s framework.

This requires more than a cultural shift; it demands clarity of mandate. Every significant regulatory measure should be assessed against a simple question: does it promote growth and competitiveness while preserving stability, or does it unintentionally constrain them?

Europe is entering a decisive period. In the coming months, crucial debates will take place on competitiveness, banking regulation, capital markets and global standards. At the same time, the United States is expected to publish its final Basel III proposals within weeks, likely pointing towards a more balanced and capital-neutral calibration.

Regulatory divergence risks widening further, and that gap will ultimately be felt in the real economy through reduced credit supply and higher financing costs.

The decisions taken in 2026 will determine capital availability and growth over the next decade.

There is no time to lose and no excuse to delay these essential reforms. Europe has everything it needs to succeed: strong institutions, high levels of savings, capital and human talent. The time has come for policymakers to be ambitious and ensure that the banking system can fully play its role in driving growth, enabling Europe to finance its strategic priorities.

Europe must act now.

This is not a technical issue, nor one that only affects banks. It has a direct impact on all of us — individuals, institutions and businesses — especially small companies, which are the engine of European growth.

This op-ed is jointly signed by the following financial executives: C.S. Venkatakrishnan (Barclays), Jean-Laurent Bonnafé (BNP Paribas), Nicolas Namias (BPCE), Olivier Gavalda (Crédit Agricole), Christian Sewing (Deutsche Bank), Georges Elhedery (HSBC), Steven van Rijswijk (ING), Ana Botín (Santander), Slawomir Krupa (Société Générale), Bill Winters (Standard Chartered) and Sergio Ermotti (UBS).