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European banks push for lower cross-border hurdles

Call for end to ‘fragmented approach that is trapping capital and liquidity’ and putting lenders at disadvantage to US rivals

European banks are intensifying their calls for regulators to remove obstacles to cross-border banking services in the EU, claiming they are increasingly being put at a disadvantage against bigger US rivals.

In a report released on Tuesday, many of the top lenders in Europe criticise regulators for trapping hundreds of billions of euros in capital and liquidity behind national barriers, being too slow to approve mergers and failing to harmonise EU rules.

“In theory, you can collect deposits in Germany and make loans in Italy — just like you can get deposits in Kansas and lend them in California — but in reality you can’t because of national barriers,” said a senior executive at a large European bank.

The Association for Financial Markets in Europe, which published the report, called on the European Central Bank and national authorities to remove many of the hurdles to cross-border banking services, saying this was necessary to boost EU financial stability and growth prospects.

“For banks operating within the banking union on a cross-border basis, their profitability is severely hindered by the fragmented approach that is trapping capital and liquidity,” said Adam Farkas, head of the AFME. “Changing this would be transformational in terms of economic efficiency.”

The renewed lobbying effort comes as US and UK regulators adopt a more bank-friendly approach in response to political pressure to reduce the burden of regulation on the sector — raising fears of European lenders being left behind. 

EU banks have long been frustrated by a political impasse over creating a pan-European deposit insurance scheme. But Farkas said that even without this “there is still plenty that can be done to significantly improve how the banking union functions”.

The EU has been slower to cut red tape despite the shake-up recommended in last year’s landmark report by Mario Draghi, the former Italian premier and head of the European Central Bank. 

Draghi called for the EU to set up a 28th regime for the largest banks in the bloc that supersedes the rules of its 27 member countries. Brussels is consulting on creating such a regime — but one aimed at innovative start-ups, not big banks.

The AFME said it had identified “a number of critical implementation gaps” in the Eurozone’s banking union, citing ECB estimates that €225bn of capital and €250bn of liquidity have been trapped by national restrictions that impede cross-border activities.

Cross-border mergers between EU banks have “consistently declined over the last two decades, limiting consolidation and efficiency gains”, the report said, blaming “cumbersome authorisation processes involving multiple authorities”. 

Banking mergers and acquisitions in the EU took 285 days to complete on average over the past three years, 100 days more than a decade ago, the AFME said. That compares with 219 days for the average US banking deal, 173 days in the UK and 85 in Switzerland.

There have been signs of a pick-up in cross-border EU banking deals, such as the €6.4bn bid by France’s BPCE for Portugal’s Novo Banco in June. But such moves often stir up political opposition, as with the investment by Italy’s UniCredit in Germany’s Commerzbank.

Last year the number of mergers between Eurozone banks rose slightly, but it remained at one of the lowest levels for the past three decades, according to Dealogic. 

Once Eurozone banks grew beyond €451bn of total assets, the AFME estimated they suffered from negative synergies, as their administrative costs started to rise in relation to total assets. “The limits to economies of scale and the lack of a completed banking union means that EU banks cannot match the size and profitability of their US counterparts,” it said.

The lobby group said the EU had more onerous requirements than the US or UK for banks to raise an extra layer of debt that regulators can wipe out or convert to equity in a crisis — known as MREL, or minimum requirement for own funds and eligible liabilities.

It also called for waivers to free up trapped capital and liquidity and a simplification of national macroprudential capital buffers in different EU countries. “If you can’t move funds across borders, what is the point of expanding cross-border?” said the senior executive at a large European bank.

Donald Tusk’s government in drive to move away from coal dependence and bolster energy security

Some 20km off Poland’s Baltic coast, five wind turbines rise high above the waves, with their red-tipped blades cutting through the sea air.

They look like an oddity, but Poland’s first offshore turbines will be joined by dozens more over the next year as an expansion of wind farms reshapes the country’s energy landscape and attracts foreign investors.

Poland has been a relative laggard in the transition to clean energy and depends on coal — considered the dirtiest fossil fuel — for just over half of its electricity generation compared with 12 per cent for the EU in 2023.

Warsaw previously prioritised the interests of its powerful coal industry over EU climate targets, despite strong winds and shallow waters along the Baltic coast making Poland an attractive location for offshore wind projects.

But the offshore sector has been gaining support from the government, which has also been motivated by the need for energy security after the country stopped importing Russian oil and gas following Moscow’s full-scale invasion of Ukraine in 2022.

“It wasn’t a question of wanting to stay away from Poland, but for a very long time the regulatory framework just wasn’t in place here,” said Toby Edmonds, executive vice-president for offshore projects at Northland Power.

The Canadian energy group is partnering Poland’s state-controlled oil and gas group Orlen in the €4.7bn Baltic Power project — the most advanced of three flagship ventures pairing domestic companies with foreign partners who provide technology expertise.

Speaking last month during a tour of the first cluster of installed Baltic Power turbines, Prime Minister Donald Tusk hailed the project as a “gigantic investment” that would bring Poland “closer to full energy security and independence”.

Orlen holds 51 per cent of the venture — with Northland owning the rest — which aims to activate its 76 planned turbines before the end of 2026.

Ørsted, the world’s largest offshore wind developer, is constructing a slightly larger wind farm with state-owned utility PGE nearby, while Polish company Polenergia is developing an offshore project with Norway’s Equinor.

The ventures are set to provide almost 6GW gigawatts of capacity by 2030 and, as more projects come on board, Tusk’s government aims for 18GW by 2040, equivalent to roughly half of Europe’s existing capacity.

Poland’s wind energy association has estimated that the country could eventually have 33GW and cover more than 50 per cent of the country’s existing electricity demand through offshore wind energy.

“The previous government was generally thinking about coal and not renewable resources,” said energy minister Miłosz Motyka, adding that the Tusk administration had created better conditions for foreign companies to support Poland’s energy transition.

About 15km down the coast, Ørsted and PGE’s Baltica 2 venture is progressing despite financial problems at the Danish company, which announced a $9.4bn rights issue last month. US President Donald Trump’s hostility to offshore wind has also dented confidence in the sector among some investors.

In late July Polish contractors began drilling cable trenches behind a tourist beach to allow offshore turbines to supply power via lines running beneath the seabed, and construction at sea is due to start next year. Ørsted said the project “will not be impacted by the rights issue”.

As a late entrant — Denmark inaugurated the world’s first offshore wind farm in 1991 — Poland is getting more modern and efficient technology. Baltic Power’s turbines can each generate 15MW, compared with 4MW for units installed at Northland’s Dutch wind farm a decade ago.

“We’re now using the largest and latest model of turbines available outside of China,” Edmonds said, while sailing around Poland’s new offshore turbines. “Poland is getting a real transfer of knowledge and experience in an industry that has been getting better and better.”

Other foreign companies are also moving in. Germany’s RWE is pursuing its own Polish offshore project, while Siemens Gamesa agreed in July to supply 26 turbines for a project by Ocean Winds, a joint venture between Portugal’s EDP Renewables and France’s Engie. 

The offshore wind drive is also spurring activity in the wider supply chain, with foreign companies heeding a call by Tusk for the “re-Polonisation” of the economy and support for domestic players.

Poland “can become an offshore hub for the Baltic region and the rest of Europe,” said Nils de Baar, from Danish manufacturer Vestas, which opened a Polish factory that produces nacelles for offshore turbines this year, and is considering adding a facility for offshore blades.

Rebecca Cooke, who oversees drilling for Ørsted, said local subcontractors were adapting quickly despite their lack of offshore experience, vindicating its decision not to take the “easy option” of bringing in international contractors.

“If your background is land-to-land drilling and suddenly you’ve got also to deal with the sea, it’s a big challenge,” she said.

Poland’s Baltic coast is also set to host the country’s first nuclear power plant, under a 2022 deal struck by the previous government with US companies Westinghouse and Bechtel. The plant is scheduled to become operational in 2036, and will use seawater to cool down its reactors.

“Poland’s energy transition, and its goals for decarbonisation and energy security, have created favourable conditions,” said Dan Lipman, a senior Westinghouse executive handling nuclear projects.

--> FT Article

Read Across Nanobiotix : From the article I shared, Novartis is pioneering radioligand therapies — targeted radioactive drugs that deliver radiation inside cancer cells instead of externally. While the mechanisms differ (nanoparticles vs. radioligands), both aim to make radiation more precise and effective while sparing healthy tissue

.

Here are some groups “similar” to Nanobiotix in this space:

• Novartis – Leader in radioligand therapies with Lutathera (GI cancers) and Pluvicto (prostate cancer).
• Lilly, AstraZeneca, Sanofi – Recently acquired start-ups in radioligand therapy, trying to catch up with Novartis.
• Smaller biotechs – Many start-ups are emerging in Europe and the US, focusing on radioligand chemistry and isotope supply (e.g., actinium, lutetium).
• Other nanoparticle/radiotherapy enhancers – Companies like Blue Earth Therapeutics or Fusion Pharmaceuticals are also advancing radiopharmaceuticals.

Difference vs. Nanobiotix:

--> Both represent the broader “next-gen radiation oncology” trend: making radiotherapy highly targeted, effective, and safer.

The Swiss pharma group has become a pioneer in a new type of targeted radiotherapy

Doctors and drug developers who first saw scans from a new targeted form of radiotherapy were amazed. For some patients in the clinical trial, Novartis’ radioligand therapy had — in just six months — completely cleared cancer that had spread around their bodies. 

Michael Morris, an oncologist at New York’s Memorial Sloan Kettering Cancer Center, said it was “incredible” and “never seen before”. In the first trial he worked on, the scans were clear of cancer for about 9 per cent of the participants. In the second trial, it was 21 per cent.

“We can’t cure metastatic disease, but in most cases, treatment [also] really doesn’t impact how the disease appears on a scan,” he said. “We have something very different here.” 

Novartis has been involved in developing cancer drugs for decades but it became a pioneer in radioligand therapy after acquiring the technology in two deals. In 2017, it bought Advanced Accelerator Applications, which was founded by scientists from Cern, the European organisation for nuclear research. The following year it announced a $2.1bn deal for US biotech Endocyte.

Radiotherapy, which is used to treat about half of all cancer patients, is usually delivered from outside the body to kill cancerous cells, but healthy tissues are damaged in the process. Radioligand therapy is given intravenously as an infusion containing radioactive isotopes attached to a ligand. These are molecules that bind to receptors on cancer cells and allow a much more targeted dose of radiation to be delivered.

Lutathera, a radioligand therapy that Novartis acquired in the AAA deal, was first approved in 2017 as a treatment for some gastrointestinal cancers. The Swiss drugmaker received its first US approval for its prostate cancer drug Pluvicto in 2022, and has since expanded into treating patients with earlier stage disease.  

In 2021, chief executive Vas Narasimhan estimated the market could be worth about $10bn. Earlier this year, he told the Financial Times that if the therapy lives up to its promise, it could be a $25bn to $30bn market.

“We think there’s a whole set of targets that are unique that we think could only be targeted with radioligand therapy,” he said. 

But the promising therapy comes with major logistical challenges. The radioisotopes must be made in a nuclear reactor, then the radioactive drug has to be safely manufactured, transported and delivered to patients.

Novartis has spent years working to overcome these hurdles. Yet other companies see the opportunities in the therapy and are racing to catch up. In 2023 and 2024, US drugmaker Lilly, UK pharmaceutical company AstraZeneca, and French company Sanofi all bought start-ups developing radioligand therapies. 

Philipp Holzer, executive director of radioligand therapy chemistry at Novartis, said companies were now popping up like “mushrooms”, and so were the suppliers of the isotopes. “There’s a market being created now,” he said. 

Novartis has seven potential radioligand therapies in 15 clinical trials, with more in pre-clinical testing. It is exploring different isotopes, and therapies in combination, and expanding into other cancers including lung, breast, pancreatic and colon. 

On the Novartis campus in Basel, the main radioligand lab had to be reinforced so 40 tonnes of lead could be installed to prevent radiation seeping into the rest of the building. All the scientists that work in it wear two dosimeters, including a mini one on their finger, to measure their radioactive exposure. 

They are trying to find ways to make the therapy work for a wider range of cancers. This includes finding drugs that will bind to genetic mutations that are very common in tumours, but not elsewhere, to avoid irradiating healthy tissues. 

“For every cancer type, it’ll be a unique solution,” said Narasimhan. “Very little in the human body is just like plug and play. You have to solve the challenges.” 

Once new radioligand therapies are approved, the challenge is making them at scale. Novartis has purchased much of the supply of the radioactive isotope lutetium, so other companies are looking at alternatives such as actinium. Much of this isotope is sourced from Russia, so they are also looking for supplies elsewhere. 

Once the radioactive material has been made, the company has only three to five days to create the drug and deliver it to the patient before the decay process starts to make it less effective. Each vial is made for an individual patient, tailored to their planned treatment date. Novartis has previously struggled to keep up with demand for Pluvicto, but 99.5 per cent of injections are now administered on the planned day, it said. 

Steffen Lang, president of operations at Novartis, said the isotope must be bound to the molecule that targets the cancer in the right concentration, and then checked for quality. “It’s not only quick, it needs to be right the first time.”

Then, a team works 24/7 to track GPS-tagged vials. Novartis is starting to use generative AI to help it anticipate logistical problems and select routes to hospitals. To get closer to hospitals and patients, it is expanding manufacturing plants from its current six in the US and Europe, adding more in China, Japan, and the US. 

“Air traffic problems, severe weather conditions, we’ve seen it all,” Lang said.

There are further challenges when the radioligand therapy is given to patients: unlike with external radiotherapy, the radioactive material remains in the body, continuing to work after the dose is delivered. In some countries, including Germany and Japan, patients must remain isolated overnight in a radiation-proof hospital room. At the moment, there are few companies that can build this type of specialist facility. 

Clinicians also need to be trained in how to care for these patients. In some countries, patients’ urine must be collected and stored for 70 days until the radioactive material in it has decayed. 

Carla Baenziger, portfolio manager at asset manager Vontobel — a Novartis shareholder — said that despite the hurdles, targeted therapies like this are the “future for cancer treatment”. 

She said this year is important for Novartis, partly because it received expanded approval for Pluvicto, doubling the potential patient population. Yet she believes it will still take 10 to 15 years to build the ecosystem required for radioligand therapy to be mainstream. 

Novartis has surmounted many of the problems, especially scaling production, creating a “high barrier to entry for other competitors”, she said.

Narasimhan agrees Novartis has an advantage. “When you enter this field by acquiring a biotech, which some of our peers have done, it gives you a start. But it’s a lot of work and investment to figure this out,” he said. “We have a five year head start.” 

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