EBA Publishes Impact Assessment of Basel Reforms on EU Banks
EBA published an assessment report that quantifies the impact of the recently agreed reform package by BCBS on the European banking system; this follows up on the cumulative assessment published on December 07, 2017. The report presents aggregate data on EU banks and assumes full implementation of the final Basel III framework, as endorsed by the Group of Central Bank Governors and Heads of Supervision (GHoS).
The report reflects all the revisions to the credit and operational risk approaches as well as revisions to the process for the estimation of leverage ratio. However, it does not include changes resulting from the revised securitization framework and the revised credit valuation adjustment (CVA) risk framework. Overall, the results, based on data as of December 31, 2015, show that European banks' minimum tier 1 capital requirement would increase by 12.9% at the full implementation date. To comply with the new framework, EU banks would need EUR 17.5 billion of additional CET1 capital, with the total capital shortfall being EUR 39.7 billion. Additionally, 20.5% of the EU banks in the sample would be constrained by the output floor, which has been set by the GHoS at 72.5% of the standardized approach requirements.
This exercise monitors the impact of fully implementing the Basel reform package on banks' minimum required capital, capital ratios (risk-based and non-risk-based), and capital shortfalls. The results of the report are presented separately for Group 1 and Group 2 banks. Group 1 banks include internationally active banks with tier 1 capital in excess of EUR 3 billion while all other banks are categorized as Group 2 banks. The analysis provides separate figures for the sample of global systemically important institutions. Where applicable, the analysis takes account of capital buffer of the global systemically important institutions, for the risk-based capital requirements and the leverage ratio requirements.
Related Link: Press Release
Keywords: Europe, EU, Banking, Basel III, Impact Assessment, Regulatory Reforms, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
ESMA to Update MiFID II Registers from January 2018Next Article
ESMA Publishes 21st Extract on Enforcement DecisionsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
