The Danish Compromise tests Europe’s appetite for regulatory easing

Plans for higher defence spending and a more relaxed supervisory attitude to matters such as M&A are fuelling optimism in European banks’ ability to thrive, even with thinner interest margins. Successful growth strategies crossing the boundaries of banking, insurance and asset management, however, will rely more on industrial rationale than regulatory inducements such as the Danish Compromise.

Donald Trump’s return to the White House has added to hopes that European officials will lean more towards policies that are favourable to banks, so they can better compete with the Americans.

Calls for a softer stance on banks were already growing in Europe before Trump’s second term. European banking leaders speaking to Euromoney say financial policymakers are increasingly listening to their calls on the need to help banks boost the continent’s sovereignty – both in military and financial terms – amid Trumpian isolationism and economic protectionism.

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