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The European Banking Authority (EBA) welcomes the agreement reached on the finalisation of the Basel III framework by the Basel Committee on Banking Supervision (BCBS), which concludes the global post-crisis prudential reforms. ‘Strong international standards are an essential common yardstick that will support a safe and sound cross-border banking on a global scale' Andrea Enria, Chairperson of the EBA, said in 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' Enria added. The EBA published today a summary of the results showing the impact of the agreed reforms on the EU banking sector.
Key findings of the EBA impact assessment
The EBA analysis showed that, under the revised international standards, minimum required capital (MRC) 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 (G-SIIs) 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.
The EBA supports the aim of the global agreement to restore credibility and comparability of regulatory capital metrics. In this respect, the EBA has been fully engaged in reducing excessive variability of risk-weighted assets through a regulatory roadmap aimed at effectively harmonising definitions and parameters of internal models. The efforts made by the EBA in this area since 2015 reduce the variability gap targeted by the Basel agreement.
The EBA will publish a more detailed cumulative impact assessment report in due course.
Background
- The impact assessment published today is based on data as of December 2015. As a consequence, 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.
