(Bloomberg) — The European Union needs to make progress on its long-mooted push to unify its banking and capital markets now it can no longer rely on the City of London, according to UBS Group AG Chairman Colm Kelleher.
Britain’s departure from the EU has stripped the bloc of its main center for market proficiency, skills and expertise, Kelleher said at an event at Bloomberg House in Davos on Wednesday, describing it as one of the tragedies of Brexit. “Europe itself is essentially a closed market – so it has to find its way without Britain,” he said.
“The EU itself has got fundamental problems,” Kelleher said, noting that European equity market capitalization is less than what it was 13 years ago.
With banks in Europe accounting for 80% of lending — almost the inverse of the US — the bloc has to understand that they need to redevelop their banking union capital market, he said, while cautioning that substantive progress will take a long time.
“The EU needs strategic access to better markets and somehow to work out the banking union” despite vested interests, he said.
The lack of a single capital market in the region has long held back retail investing and left companies reliant on bank lending. The banking union was conceived in the throes of the region’s sovereign debt crisis to break the “doom loop” between national governments and lenders, but remains unfinished.
Read More: Europe Bank Chiefs Step Up Integration Calls as U.S. Gap Widens
©2024 Bloomberg L.P.
