EBA welcomed the agreement reached on the finalization of the Basel III framework by BCBS, which concludes the global post-crisis prudential reforms. EBA also published a summary of the results of its study showing the impact of the agreed reforms on the EU banking sector.
EBA analysis showed that, under the revised international standards, minimum required capital for the EU sample would increase by 12.9% in weighted average terms. The increase is mainly driven by the impact of the reforms on global systemically important institutions and larger institutions (Group 1 banks). The assessment also finds that the weighted average CET1 ratio, calculated in accordance with the revised framework, is 0.6 percentage points lower than the status quo. The aggregate output is the main driver of the capital impact for the EU sample under the new standards. EBA will publish a more detailed cumulative impact assessment report in due course.
The impact assessment is based on data as of December 2015. Consequently, numbers may not fully reflect EU banks' current situation, as they do not account for the significant capital increases and adjustments made to business models since 2015. The sample used to assess the impact of the revised standards includes 88 European institutions from 17 EU member states, of which 36 are Group 1 institutions and 52 are Group 2 institutions. “Strong international standards are an essential common yardstick that will support a safe and sound cross-border banking on a global scale,” Andrea Enria, the EBA Chairperson, said while welcoming the Basel agreement. ”The EBA is committed to engaging with competent authorities and European co-legislators to ensure a successful implementation of the standards in the EU,” she added.
Keywords: Europe, EU, Banking, Basel III, Final Basel III Reforms, Capital Framework, EBA
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