EBA Welcomes Final Basel III Reforms and Assesses Their Impact in EU
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.
Related Links
Keywords: Europe, EU, Banking, Basel III, Final Basel III Reforms, Capital Framework, 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.
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Previous Article
OSFI Consults on Revisions to Capital Adequacy RequirementsRelated 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.
