A toxic combination of negative interest rates, comatose economies and a regulatory backdrop that might euphemistically be described as challenging is wreaking havoc with bank business models. Their collective market value has dropped by a quarter so far this year.

The smoke signals emanating from the European Central Bank in recent weeks suggest regulators aren't blind to this. Daniele Nouy, who chairs the ECB's bank supervisory board, said earlier this week that the central bank "is aware that the low-interest-rate environment is putting pressure on the profitability of European banks." Regulators may respond by going easier when drafting new rules.

Bank-failure rules to prescribe how banks design their balance sheets to absorb potential losses may be eased, according to a European Commission discussion paper prepared last month.