The EBA Proposes Simplifications To The EU Bank Capital Framework In A Holistic Manner To Strengthen Its Efficiency

The European Banking Authority (EBA) continues to execute on its simplification and efficiency programme. After proposals in April to reduce the reporting burden for banks and for a simpler stress-test in 2027, it publishes today a comprehensive review of the EU bank microprudential, macroprudential and resolution capital framework, including proposals to simplify it. The proposals aim to reduce complexity while preserving banks’ resilience and resolvability as well as authorities’ tools, and to ensure the framework remains focused on emerging and materially evolving risks.

Building on its July 2024 description of the microprudential, macroprudential and resolution capital regime in the EU (“stacking order”) and on its October 2025 Report on the efficiency of the regulatory and supervisory framework (“TFE report”), the EBA provides a comprehensive overview of the implementation of capital requirements and buffers in the EU over the past decade.

It also identifies a number of improvements to their design and interaction without weakening the resilience built over the past decade. The Report does not advocate a fundamental redesign. It focusses on adjustments to improve consistency, predictability and effectiveness while ensuring the acquired resilience of the European banking system is preserved. Recommendations are being assessed against four guiding principles: preserving overall resilience and capital neutrality; adhering to international standards; ensuring proportionality; and enhancing the efficiency and depth of the Single Market. The Report also discusses options which are not recommended.

Taking a holistic perspective, the Report recommends the following simplification measures:

1. A simpler microprudential stack:

• To preserve the existing risk-based microprudential toolkit including Pillar 1, Pillar 2 requirements (P2R) and Pillar 2 guidance (P2G) while clarifying and strengthening their respective roles;
• To sharpen the focus of supervisory tools on institution-specific and emerging risks;
• To remove macroprudential considerations from the microprudential stack;
• To simplify the leverage ratio (LR) stack, by converting the LR Pillar 2 requirement into a buffer and removing the LR guidance.

2. A simpler macroprudential stack:

• To combine the current countercyclical capital buffer (CCyB) and the systemic risk buffer (SyRB) into a single releasable buffer supported by a high-level common methodology;
• To update the O-SII framework, including enhancements to the scoring methodology and considering buffer calibration.

3. A simpler resolution stack:

• To streamline the MREL framework, including the alignment of definitions of TLAC and MREL eligible resources. reducing metrics and simplifying adjustments, to reduce operational complexity.

Taken together, the Report makes an in-depth contribution to the simplification debate by setting out detailed recommendations to reduce the number of regulatory layers and stacks.

In line with the TFE, this Report also highlights the importance of coordination amongst the authorities responsible for using these various instruments although it does not discuss it.

 Notes for editors

1. Today’s publication marks the third major milestone under the EBA’s communication campaign “Simplifying to strengthen: building a more efficient EU prudential and supervisory framework”. This initiative is part of the EBA’s broader priority to simplify and enhance the efficiency of the regulatory and supervisory framework, in line with the work of its Task Force on Efficiency (TFE) and the EBA’s Report on the efficiency of the regulatory and supervisory framework, published on 1 October 2025. It delivers, in particular, on Recommendation 9 of the TFE, which called for for streamlining the interaction of capital buffers, MDA requirements, and multiple own funds, leverage and TLAC/MREL requirements.
2. TFE recommendation 14 in the TFE report sits in the section on the “holistic picture” and recommends an analysis of the coordination between public authorities which his underway with a view to complementing the present work on the design of the instruments.
3. The Report builds on the EBA’s 2024 Report on stacking orders and capital buffers, which illustrates the complexity, granularity and multi-layered nature of the EU banking regulatory framework, and the large number of interacting prudential and resolution requirements that institutions must manage.
4. The proposals are also linked to the revision of the Supervisory Review and Evaluation Process (SREP) Guidelines, consulted on 24 October 2025 with the final report forthcoming.