At the end of 2016, the average ratios of the EU improved further, the European Banking Authority (EBA) announced on Tuesday 12 September, in its 12th report on the compliance of the European banks with the European prudential rules, specifically the European Capital Requirements Directive and Regulation (CRD-CRR package), which have been in force since 1 January 2014, but which are currently the subject of transitional measures.
On the basis of the data available on 31 December 2016, the EPA report stresses an additional improvement in the capital positions of the 164 European banks in the sample. Whereas the European regulatory framework lays down a target of 7% (4.5% CET1 optimum quality capital plus a 2.5% capital buffer) to be achieved progressively by 2019, the results show an increase in the CET1 ratio from 12.8% in June 2016 to 13.4% in December 2016.
It is worth noting that the average level of leveraged indebtedness observed is be 5% compared to 4.7% in June 2016. From 2018 onwards, banks must comply with a regulatory requirement concerning their leverage ratios, which will require them to hold a minimum amount of basic own funds (tier 1), which has been laid down at 3% of total exposure on- and off-balance sheet, with no risk weighting.
At the end of last year, the average liquidity ratio (LCR), which ensures that banks have sufficient liquidity in the short term, stood at 139.5%, compared to 133.7% in June 2016. Furthermore, the authority notes that 99.2% of financial institutions assessed have an LCR ratio above the threshold of 100%, which will apply from January 2018. The analysis explains that the steady increase in this ratio since 2011 is the result of increases in banks' liquidity reserves.
As for the net stable funding ratio (NSFR), which ensures that European banks have sufficient liquidity to finance long-term lending, the report shows that some 87.5% of the participating banks already meet the minimum requirement of 100% of the NSFR ratio. In the absence of a definitive EU definition, the EBA monitored compliance in light of the international Basel III rules will apply in full from 2019, for this ratio. (Original version in French by Marion Fontana)