Brussels, 16/09/2015 (Agence Europe) - On Tuesday 15 September, the European Banking Authority (EBF) published its eighth report on European banks' compliance with the Basel III prudential rules that come fully into force in 2019.
According to figures available at the end of 2014, none of the 53 big European banks examined (banks active internationally with high-quality CET 1 capital of above €3 billion) had a CET1 capital shortfall for reaching the 4.5% minimum solvency level. The EBF explains that the ratio of CET1 capital to total assets in this group of banks is 12.2% under the current prudential rules and 11.4% under the Basel III rules that will apply from 2019.
For this group of 53 big European banks, the report shows that the CET1 capital ratio shortfall for achieving the 7% target (4.5% of CET1 plus 2.5% buffer) has fallen from €2.8 billion under the previous monitoring report €1.5 billion at the end of 2014 (see EUROPE 11266). This total shortfall does not change if one adds the extra capital required for big banks. It is essentially due to changes in the way capital is defined, and marginally to changes in the way weighted risk capital is calculated.
The EBF also published data on several important ratios. For the leveraged debt ratio, the capital shortfall stood at €19.4 billion at the end of 2014 for the 53 big European banks. The average liquidity level (LCF) was 123.7%; nearly 90% of the banks analysed respected the 100% ratio that will apply from 2019, but the total liquid asset shortfall stood at €38.3 billion at the end of 2014. (Mathieu Bion)