A bank may be supervised by the ECB whilst remaining confined within national borders. Its soundness is assessed at group level, but its subsidiaries remain subject to individual prudential requirements and national crisis management arrangements.
Ignazio Angeloni wants to resolve this contradiction. In an article published by the Financial Times, the former member of the European Central Bank’s Supervisory Board proposes creating a “home-country-blind” regime for groups that carry out, or aspire to carry out, substantial cross-border business within the eurozone.
This proposal does not represent the position of either the ECB or the European Commission. It builds on a study that Angeloni had drafted in 2024 at the request of the European Parliament’s Committee on Economic and Monetary Affairs. In that study, the economist had already argued in favour of a single jurisdiction for a limited category of cross-border banks.
The EU already has a common body of regulations. The Capital Requirements Regulation (CRR) harmonises some of the prudential rules. The Single Supervisory Mechanism entrusts the ECB with the direct supervision of the largest banks, with the assistance of national authorities. This framework has not abolished national legal entities. A branch remains part of the bank established in its home country. A subsidiary constitutes a separate institution, with its own structures and resources. Major European groups have already largely organised their international expansion around such subsidiaries, notes Angeloni. These subsidiaries remain subject to individual capital and liquidity requirements. European law allows supervisors to grant certain exemptions, notably to treat several institutions as a single liquidity sub-group. However, these cross-border exemptions require several conditions to be met and the reluctance of the authorities concerned to be overcome.
250 billion euros are reportedly not in free circulation
The ECB noted once again in 2025 that the cross-border liquidity exemptions permitted under European law had not been utilised. Host country authorities fear that a subsidiary might lack resources in a crisis following the transfer of its capital or liquidity to another part of the group. These constraints come at a cost. In 2022, the ECB’s banking supervision arm estimated that the combination of individual liquidity requirements and certain national limits applied to intra-group exposures prevented around €250 billion from circulating freely within the banking union. This estimate provides a historical order of magnitude; it has not been updated in the documents consulted.
Angeloni is not merely proposing greater use of existing exemptions. He wants to enshrine special treatment directly in European law for groups that meet structural and prudential criteria. All their activities within the area covered by the banking union would be treated as domestic for the purposes of regulation, supervision and crisis management. “Banks with the ambition and capacity to operate beyond national borders must be subject to a regulatory framework that is independent of their country of origin,” he writes in the Financial Times. Provisions that prevent the free movement of capital, liquidity and other prudential resources would be abolished or mandatorily lifted for eligible groups.
However, the proposal does not involve allowing parent companies to drain their subsidiaries of their resources. At the same time, Angeloni proposes making intra-group support mechanisms mandatory and enforceable. These should be able to be activated both before and after an entity reaches the point of non-viability. His proposal would also change the way defaults are handled. A cross-border bank declared to be in a state of actual or foreseeable failure would fall under the remit of the European Resolution Authority, rather than being subject to national liquidation. The groups concerned would also fund a specific deposit guarantee scheme. National schemes would continue to cover banks whose business remains primarily domestic.
Scepticism towards… the ECB
Angeloni therefore does not make his reform conditional on the prior establishment of a general European deposit insurance scheme. He proposes a framework specifically for cross-border groups: the free movement of funds in normal times, mandatory intra-group support in the event of difficulties, European resolution and a dedicated deposit guarantee scheme. The former supervisor is also wary of a system based solely on authorisations granted by the ECB. In the Financial Times, he points out that the supervisory board comprises 21 national representatives and six European members. He believes that coalitions could form within it to protect national interests. He prefers a directly applicable rule that would reduce the scope for arbitrage by supervisors.
On 17 July 2026, the European Commission adopted a communication on the competitiveness of the banking sector and the single market. It agrees with the assessment that fragmentation is limiting the flow of capital and liquidity, economies of scale and the development of cross-border groups. It announces measures designed to strengthen banking integration whilst maintaining the system’s resilience. However, Brussels has not, at this stage, adopted the specific jurisdiction proposed by Angeloni. Its communication acknowledges the concerns of host countries: a subsidiary could run out of resources in the event of a crisis, leaving national authorities to manage its failure without sufficient support from the parent company. The legal arrangements for the guarantees intended to accompany a freer flow of resources remain to be clarified in future proposals.
The Commission also wants to revive work on a European deposit insurance scheme by replacing its 2015 proposal. Its approach therefore remains that of reforming the common framework applicable to the banking sector, whilst Angeloni advocates a separate regime for a limited number of cross-border groups.
Shared diagnosis, much less treatment
The ABBL agrees with the economist on several points. The Luxembourg-based association believes that European banks are still operating in an environment fragmented by divergent national rules, different tax systems, varying anti-money laundering requirements, distinct insolvency regimes and heterogeneous supervisory practices.
It calls for a focus on harmonisation, for a limit on excessive national transposition, and for the free movement of capital and liquidity within the Union to be ensured. It also wishes to facilitate cross-border mergers and acquisitions, with simpler authorisation procedures and less red tape. ABBL
However, its position is not the same as Angeloni’s. The ABBL is calling for the removal of genuine operational barriers rather than the introduction of new regulatory frameworks or diverting attention through even more centralised supervision. The two approaches agree on the obstacles to be removed and the flow of resources. They may differ on the degree of institutional centralisation required to achieve this.
For Luxembourg, the implications would depend on the final text adopted and the legal structure of each bank. A group with its head office in the country and subsidiaries in several other countries could benefit from a more integrated management of its resources. Conversely, a Luxembourg subsidiary belonging to a group based elsewhere could see more capital or liquidity flowing to other entities.
These effects remain hypothetical. Neither the CSSF nor the ABBL have, in the public documents examined, commented on the application in Luxembourg of the specific regime proposed by Angeloni. The future role of the CSSF, the safeguards provided to local subsidiaries and the implications for the financial centre’s attractiveness would depend on the eligibility criteria, the division of powers and the resolution mechanisms ultimately enshrined in European law.
The debate therefore goes beyond regulatory simplification. It centres on choosing the level at which a cross-border bank should be supervised, protected and, in the event of failure, restructured. Angeloni proposes shifting these three functions to the European level for a specific category of groups. The Commission is taking a more gradual approach. The ABBL wants to free the market from national barriers, without, however, giving carte blanche to further centralisation.
