In its submission to the European Commission on the competitiveness of the banking sector in the European Union (EU), the Finance Latvia Association highlights that the competitiveness of both Latvia’s and Europe’s financial sector is weakened by additional national requirements that go beyond the framework established by EU directives and regulations.

The European Commission is consulting the financial sector as part of the preparation of its 2026 report on the competitiveness of the EU banking sector, which is part of the savings and investment union strategy. Stakeholder input is being collected to assess how to strengthen the EU banking sector’s ability to finance the economy and compete both within the Single Market and internationally.

In its submission, the Association notes that in Latvia, banks’ operating costs are increased, and lending is constrained by national add-ons such as restrictions on credit advertising and price regulation of certain financial services. These measures impose stricter requirements than those provided for under EU rules, thereby distorting competition and reducing banks’ ability to finance the economy. At the same time, additional legal requirements for banks in Latvia to open new branches in the regions, while politically popular, do not reflect customer behavior and make the transition to fully digital remote services more difficult.

“If the European Union has common and harmonized rules, member states should not build additional layers on top of them that make banking services more expensive, distort competition, hinder the adoption of digital business models and slow down lending. Latvia’s priority should not be to artificially complicate and increase the cost of financial sector operations, but to create an environment in which banks can direct more resources towards financing the economy, innovation and secure digital solutions,” says Uldis Cērps, Chairman of the Management Board of the Finance Latvia Association.

In addition, banks’ competitiveness and their ability to invest in economic development continue to be negatively affected by the solidarity levy that still applies to banks in Latvia.

The Association’s full submission to the European Commission, including its detailed opinions and arguments, is available here: https://www.financelatvia.eu/wp-content/uploads/2026/04/LAT-Response-EC-Consultation-2026.pdf