Report on the efficiency of the regulatory and supervisory framework

General Information

This document is a report published by the European Banking Authority (EBA) in October 2025, entitled "Report on the efficiency of the regulatory and supervisory framework." It addresses the effectiveness of the regulatory and supervisory banking framework in the European Union. The report analyzes four key areas: the production of level 2 and 3 regulatory standards, the reporting burden on financial institutions, the EBA's contribution to the European prudential framework, and the EBA's internal working methods. The scope covers financial institutions supervised in the EU, focusing on the current period and prospects up to 2026 and beyond.

Executive Summary

The EBA report assesses the effectiveness of the regulatory and supervisory banking framework in the European Union, in the context of European efforts to simplify and make this framework more efficient. The aim is to ensure the resilience of the European financial system while reducing complexity and burden for financial institutions. Four axes are analyzed: the production of regulatory standards (L2 and L3), the reporting burden, the EBA's contribution to the prudential framework, and its internal working methods. The report finds that 20% of future regulatory mandates could be deprioritized, which requires agreement with the European Commission and co-legislators. It proposes a methodology for assessing the materiality of mandates to better prioritize resources. The reporting burden, although reduced by 20% since 2021, remains high and requires a further 25% reduction through simplification, coordination, and better change management. The report highlights the complexity of the regulatory framework, which, although robust, could be improved by simplifying capital requirements, more systematic application of proportionality for small non-complex institutions (SNCI), and better harmonization of rules. It also recommends strengthening convergence of supervisory practices by favoring an ex post approach, with adapted tools and better resource allocation. Finally, the report proposes internal organizational adjustments at the EBA to accelerate and improve the quality of work. These recommendations will be integrated into the EBA's work program with deadlines ranging from 2025 to beyond 2026.

Context and Objectives

The report was drafted within the framework of European efforts to simplify and improve the efficiency of the regulatory and supervisory banking framework. Since the creation of the EBA in 2011, the banking and financial landscape as well as supervision have evolved, making a thorough assessment of the relevance and efficiency of level 2 and 3 standards necessary. The objective is to reduce complexity, reporting burden, and improve coordination between authorities while preserving the resilience of the financial system and the EU's international credibility. The report aims to propose concrete recommendations to optimize standards production, lighten reporting, strengthen the coherence of the prudential framework, and adjust the EBA's internal working methods. The scope is limited to financial institutions supervised in the EU, with particular attention to impacts on small non-complex institutions and interactions between regulatory levels.

Summary of Key Points by Theme

Production of regulatory standards: Since 2011, the EBA has produced a large number of L2 and L3 standards to harmonize banking supervision in the EU. The report highlights the need to assess the materiality of these mandates via a methodology considering the burden for institutions and usefulness for authorities. This assessment revealed that 20% of future mandates could be deprioritized, which would reduce complexity and regulatory burden (p. 3-5). A thorough review of existing standards will be launched, starting with credit risk, governance, remuneration, ESG criteria, and supervision and resolution processes (p. 4-5). Reporting: The EBA has contributed to a harmonized reporting framework in the EU, reducing costs by 20% since 2021. However, the multiplication of national and European requirements has increased the burden. The report proposes an overall 25% reduction of this burden through three axes: reduction of requirements, better coordination between authorities with a public repository of data requests, and proactive change management for greater predictability (p. 5-7). Overall regulatory framework: The framework is complex, covering prudential, macroprudential, resolution, AML, ESG, digital, and other areas. The report recommends reviewing the necessity and coherence of existing rules, simplifying capital and buffer requirements, and applying proportionality more systematically for SNCIs while maintaining a single banking regime. It also suggests improving harmonization of risk management concepts and data reuse between authorities (p. 6-8). EBA internal working methods: The EBA has historically adopted a bottom-up approach with competent authorities, producing quality standards but at a slow pace. The report recommends refocusing resources towards ex post convergence, with simplified tools and better prioritization of peer reviews. It also proposes reducing the number of permanent substructures and improving dialogue between them and the Supervisory Board for greater efficiency (p. 8-10).

Main Findings and Lessons Learned

Findings: Since 2011, the EBA has produced a harmonized regulatory framework with L2 and L3 standards, reducing fragmentation within the EU. The reporting burden has been reduced by 20% since 2021 but remains high. The complexity of the regulatory framework is acknowledged, with multiple and sometimes redundant requirements. Assumptions: The methodology for assessing the materiality of L2/L3 mandates identifies 20% of mandates likely to be deprioritized. The 25% reduction in reporting burden is achievable through the proposed actions. Interpretations: The report interprets that simplification and coordination are essential to improve efficiency without compromising resilience. It considers that ex post convergence of supervision must be strengthened to ensure consistent application of the framework. Uncertainties: The exact impact of the recommendations on regulatory burden and supervision will depend on acceptance by co-legislators and effective implementation. The long-term effects of internal organizational adjustments remain to be seen.

Conclusions and Recommendations

The report concludes that the European regulatory and supervisory framework is robust but can be improved in terms of efficiency and simplicity. It recommends: - adopting a methodology for assessing the materiality of L2/L3 mandates to prioritize work (immediate); - reviewing the Single Rulebook by blocks, starting with credit risk (immediate) and continuing with governance, ESG, supervision, and resolution (short and medium term); - launching a digital consolidation of the Single Rulebook (long term); - reducing the reporting burden by 25% through simplification, coordination, and better change management (short term); - simplifying capital and buffer requirements and applying proportionality more systematically for SNCIs (short and long term); - strengthening ex post convergence in supervision, with simplified tools and better resource allocation (short term); - adjusting the EBA's internal working methods, notably by reducing permanent substructures and enhancing dialogue with the Supervisory Board (short term). These recommendations will be integrated into the EBA's work program with deadlines between 2025 and beyond 2026.