The Cost of Regulation: 2020 ABBL and EY study

The ABBL and EY have just published a study on the Cost of Regulation. The main conclusions of this study, covering about ten different regulations, are:

• The total cost of implementing the regulations covered in 2019 is estimated at €548 million, representing an average annual growth of 16% since 2015
• 38% of the investment made by the banking sector in 2019 related to regulatory projects, with this value rising to 52% in the smallest banks
• 14% of total banking employment is allocated to regulatory implementation.

The results of this survey document the continued increase of the cost of compliance with regulations for banks, both in absolute and relative terms, in particular for small and medium banks. These costs put an heavy strain on lending and investment capacities in critical time for the European economy.

The ABBL has long been advocating for a more proportionate approach in the field of banking regulation to maintain diversity within the banking sector and to ensure eventually a more resilient banking system. In this context, we welcome the recent publication by the European Banking Authority of a series of recommendations to reduce regulatory reporting costs, which constitutes a first step in the right direction.