On Tuesday 16 June, the European Banking Authority (EBA) refined its proposals to simplify the banking prudential framework – without weakening it – thus supplementing earlier proposals presented last October (see EUROPE 13722/10).
The EBA is not advocating an in-depth overhaul of the regulatory framework, but rather targeted changes to the design of the framework rather than to its calibration.
As regards banks’ own funds, the EBA recommends maintaining a prudential framework based on the risks incurred, as well as placing greater emphasis on institution-specific supervisory tools. The countercyclical capital buffer (‘CCyB buffer’) and the systemic risk buffer (‘SyRB buffer’) should be merged and the resulting provision should be based on a common methodology.
As regards leverage, the requirements relating to prudential treatment (Pillar 2) should be converted into a specific buffer, the EBA believes.
The European authority is also making proposals to simplify prudential requirements in the area of bank resolution. It suggests, in particular, aligning the definitions of the eligible resources needed to comply with the international TLAC standard on own funds and with MREL requirements for assets that can be mobilised in the event of a bank failure.
According to the European authority, these proposals improve the consistency and predictability of the rules, while preserving the resilience of the banking sector that was strengthened after the 2008 financial crisis.
See the EBA report: https://aeur.eu/f/mgs (Original version in French by Mathieu Bion)