Brussels, 02/03/2016 (Agence Europe) - The average capital shortfall of the banking industry compared to the level required from 2019 stood at just €1 billion at the end of 2019, according to the ninth biannual report published by the European Banking Authority (EBA) on Wednesday 2 March.
“Results show a further improvement of European banks' capital positions, largely fulfilling the future regulatory capital requirements, with only a very small number of banks suffering from potential capital shortfalls”, the European authority stated in a press release. It puts the total capital shortfall to reach the target of 7% (4.5% of optimum-quality CET1 capital + 2.5% capital buffer) laid down in the 'Basel III' banking prudential legislation, and applicable from 2019, at €1 billion. According to the EBA, the average ratio of CET1 capital to total assets stands at 11.6% for the category of major banking groups (49 institutions active at international level and with CET1 capital in excess of €3 billion) and 12.5% for the second category, which comprises 248 banks of lower importance.
It is worth noting that the average leverage ratios observed is 4.2% for the major banks category and 5% for the smaller banks category.
At the end of June 2015, the average liquidity coverage ratio (LCR) was 121.2% for Category 1 Banks and 156.7% for Category 2 banks. 90% of the financial institutions assessed reported an LCR above the required threshold of 70% since January 2016 and 80% of them presented an LCR of more than 100%, a threshold that will apply from 2019. “The analysis shows that there is been an increase in banks' LCR over time, which can be attributed to structural adjustments (…), as well as to the recalibration of the LCR framework”, the EBA notes. (Original version in French by Mathieu Bion)