Top executives from Europe’s largest banks expressed cautious optimism that efforts to deepen local capital markets and streamline regulatory and supervisory frameworks can help narrow the competitive gap between European banks and their U.S. peers.
At the center of discussions at Morgan Stanley’s European Financials Conference was the European Union’s Savings and Investments Union (SIU), and its proposals designed to better integrate fragmented markets and channel private savings into productive investments. The initiative includes proposals to revitalize securitization and create incentives for citizens to participate more actively in capital markets.
Progress on core elements of the SIU—particularly securitization reforms and market‑integration efforts—could begin to come into clearer focus as early as May, as proposals already introduced move through active Council and Parliamentary review during spring 2026.
European Competitiveness: A Priority for Policymakers
Maria Luis Albuquerque, EU Commissioner for Financial Services and the SIU, underscored the strategic importance of the reforms underpinning the Savings and Investments Strategy in aiming to enhance Europe’s competitiveness, in a keynote address at the conference on March 17, followed by a fireside chat with Clare Woodman, Morgan Stanley’s Head of Europe, the Middle East and Africa, Latin America and Canada and CEO of Morgan Stanley & Co. International.
“Our SIU strategy has been specifically designed to create an effective and efficient financing ecosystem in Europe,” Albuquerque said in her keynote speech. “It will strengthen the links between savings and productive investments, deepen capital markets, improve access to financing for businesses, create wealth-generating opportunities for our citizens, and most importantly, it will create scale.”
Bank leaders noted a greater willingness from politicians and regulators to engage with members of the financial industry to implement reforms.
Long‑Term Reform, Near‑Term Considerations
Even with growing political support, investors and company executives remain cautious.
“On one side, we definitely heard EU’s determination to deliver on the project of the SIU to deepen European capital markets and mobilize savings towards more productive investments,” said Giulia Aurora Miotto, who covers European banks at Morgan Stanley Research. “On the other side, investors were rather skeptical and are really in wait-and-see mode. This is a key area to monitor over the coming months from a European competitiveness standpoint.”
Across the banking sector, executives reiterated that the most significant catalyst for deeper European capital markets would be reform that encourages greater private‑pension participation. Commissioner Albuquerque noted that 80% of European pension funds manage less than €1 billion, and one‑third manage under €25 million—far below the scale needed to support Europe’s investment ambitions.
The EU seeks to ensure adequate retirement incomes for local citizens by expanding and strengthening the supplementary pensions sector, with the objective of complementing—not replacing—public pensions. Regulators believe the measures will strengthen local capital markets and increase investment for growth and innovation.
While bank leaders largely endorsed the SIU’s long‑term goals, executives cautioned that shifting household savings toward equity markets will take time. As a more immediate solution, some pointed to freeing up bank capital, which could be deployed quickly in lending to support economic growth.
