Regulation of European Banks and Business Models

This report constitutes the second phase of CEPS' pioneering work in developing a methodology for analysing bank business models and bank risk, performance, governance and transparency on a continuing basis. Building on a larger sample of banks (74 banks) and a wider set of cluster analysis tools, this new study not only delves further into the categorisation of business models, but also provides guidance on the regulatory framework in European banking. The CEPS banks business model approach provides the legislator with valuable empirical data to devise well-balanced banking reforms at EU level. Contrary to a one-size-fits-all approach that necessarily leads to a regulatory 'race to the bottom', it opens up the possibility of enacting prudential rules differentiated according to the risk profile of banks.--