The widening profitability gap between Wall Street and its European counterparts has kicked off a serious conversation in Brussels about whether the continent’s stricter banking rules are becoming a competitive liability.
The great transatlantic banking divide
On the American side, proposed deregulation could unlock up to $2.6 trillion in additional lending capacity. US regulators are also pushing for a reconsideration of Basel III capital rules, with feedback expected by June 2026.
Europe, meanwhile, is tightening the screws. The EU’s CRR3 and CRD6 frameworks will impose a projected 16% increase in capital requirements for global systemically important banks, known as G-SIBs. More capital held in reserve means less capital deployed for lending and trading.
The EU has confirmed a delay in implementing the new rules until 2027.
