10 December 2020
The European Banking Authority (EBA) published today a Report on the impact of implementing the final Basel III reforms in the EU. The full Basel III implementation, in 2028, would result in an average increase of 15.4% on the current Tier 1 minimum required capital of EU banks. The results do not reflect the economic impact of the Covid-19 pandemic on participating banks as the reference date of this impact assessment is December 2019.
Overview of the results
Overall, the results of the Basel III capital monitoring exercise show that European banks' minimum Tier 1 capital requirement would increase by 15.4% at the full implementation date (2028), without taking into account EU-specific adjustments. Excluding the leverage ratio contribution, the impact of the reforms is 18.3%, of which the leading factors are the output floor (6.2%) and credit risk (5%). The minimum Tier 1 capital requirement for large and internationally active banks (Group 1) would increase by 16.2%. The respective requirement for the global systemically important institutions (subset of Group 1) and that of Group 2 banks would raise by 23% and 11.1%, respectively.
Change in total T1 Minimum Required Capital, as percentage of the overall current Tier 1 MRC, due to the full implementation of Basel III (2028) (weighted averages, in %)
|
Bank group |
Credit risk |
MR |
CVA |
Op Risk |
Other Pillar 1 |
Output floor |
Total risk-based |
LR |
Total |
||
|
SA |
RB |
Securitisation |
|||||||||
|
All banks |
2.2 |
2.4 |
0.4 |
0.6 |
3.0 |
3.8 |
-0.3 |
6.2 |
18.3 |
-2.8 |
15.4 |
|
Group 1 |
1.9 |
2.2 |
0.4 |
0.7 |
3.2 |
4.1 |
-0.4 |
7.0 |
19.1 |
-2.9 |
16.2 |
|
Of which: G-SIIs |
2.1 |
3.5 |
0.6 |
0.5 |
3.1 |
6.2 |
-0.2 |
6.8 |
22.6 |
0.4 |
23.0 |
|
Group 2 |
4.4 |
3.3 |
0.0 |
0.4 |
1.5 |
2.3 |
0.0 |
1.9 |
13.8 |
-2.7 |
11.1 |
To comply with the new framework EU banks would need EUR 9.4 billion of additional Tier 1 capital. These estimates are based on the assumption that Basel III requirements are implemented in full.
DOCUMENTS
EBA Report on Basel III Monitoring (data as of 31 December 2019)
LINKS