PARIS (Reuters) - Europe's new single banking supervisory regime could prompt restructuring in the sector, a European Central Bank board member said on Monday, adding that he saw capital markets as key to achieving more efficient financing in the bloc.
The ECB is taking over as supervisor of euro zone banks in November under Europe's new Single Supervisory Mechanism (SSM), which will give the bank wide-ranging powers, including the right to demand that lenders increase their capital buffers.
"The mere presence of the SSM could induce restructuring as banks seek to reduce margins in anticipation of increased euro area competition," ECB Executive Board member Benoit Coeure told a conference in Paris.
"This will be compounded with the competitive pressure created by the expansion of e-banking."
Turning to the composition of financing in Europe, Coeure said that while the economy would remain bank-financed, "I see achieving a greater role for capital markets as central to a more efficient ... financing mix."
Banks have seen regulations tighten at both national and international levels since the 2008-2009 financial crisis under a global clampdown on the risky activities that brought the sector to its knees.
However, as result of tougher regulations and higher capital buffer rules, many banks have reined in their lending business, which risks starving the economic recovery of credit.
Coeure said that rules for banks have been tightened enough that regulators should hold off going any further once they wrap up work this year on leverage ratios.
"In the context of the changing industrial and regulatory environment, the regulatory framework needs to stabilise," Coeure said.
(Writing by Leigh Thomas and Paul Carrel; Editing by John Stonestreet)