Featured Product

    EBA Publishes Reports Monitoring the Implementation of Basel III in EU

    March 20, 2019

    EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU. The EBA Basel III capital monitoring report includes a preliminary assessment of the impact of the Basel reform package on EU banks, assuming its full implementation. The report on liquidity measures monitors and evaluates the liquidity coverage requirements in place in EU.

    The Basel III monitoring report assesses the impact on EU banks of the final revisions of credit risk (split into four sub-categories), operational risk, and leverage ratio frameworks, as well as of the introduction of the aggregate output floor. It also quantifies the impact of the new standards for market risk and credit valuation adjustments (CVA). Overall, the results of the Basel III capital monitoring exercise, which is based on data as of June 30, 2018, show that European banks' minimum tier 1 capital requirement would increase by 19.1% at the full implementation date (2027). The impact of the risk-based reforms is 25.4%, of which the leading factors are the output floor (8.0%) and operational risk (5.5%). Leverage ratio is  the constraining (that is, the highest) tier 1 requirement for some banks in the sample but will not be as constraining under the final Basel III, explains why part of the increase in the risk-based capital metric (-6.2%) is not to be accounted for as an actual increase in the overall tier 1 requirement. This offsetting effect (-6.2%) is attributed to the leverage ratio contribution to the total impact. To comply with the new framework, EU banks would need EUR 39.0 billion of additional total capital, of which EUR 24.2 billion is tier 1 capital.

    Additionally, the liquidity coverage ratio (LCR) of EU banks, which was fully implemented in January 2018, stood at nearly 146% on average in June 2018, which is materially above the minimum threshold of 100%. However, some individual institutions reported shortfalls in the overall LCR. In parallel to this exercise, EBA is working on a more detailed report on the impact of the reforms. This report will be based on data of the same reference date (June 2018) but on an expanded sample of banks. The latter report will also cover the Pillar II requirements instead of only Pillar I requirements, as in the current report.

     

    Related Links

    Keywords: Europe, EU, Banking, Basel III, Basel III Monitoring, Liquidity Risk, LCR, Regulatory Capital, EBA

    Featured Experts
    Related Articles
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    EIOPA Consults on Reporting and Disclosures Under Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    News

    US Agencies Propose Changes to Call Reports and Instructions

    Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.

    July 22, 2021 WebPage Regulatory News
    News

    PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker

    The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.

    July 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7293