EBA proposes simplification to capital framework without weakening resilience
Overview of EBA's Proposed Capital Framework Changes
LONDON/MADRID, June 16 (Reuters) - The European Banking Authority on Tuesday set out what it called "targeted" and "balanced" proposals to simplify the bank capital framework without weakening the sector's resilience.
Global Regulatory Context
Regulators globally are weighing easing the burden on banks to support competitiveness and economic growth, although European banks have been primed not to expect major changes after the European Central Bank earlier proposed streamlining rules without easing overall capital requirements.
Details of the EBA Report
Proposed Options for Capital Structure
In its report, the EBA, which sets regulatory standards for EU banks, outlined options for limited changes to how bank capital is structured, including merging some buffers and streamlining leverage ratio requirements, without changing the composition of capital.
Next Steps and Implementation
It would be for the European Commission to take the proposals forward.
The EU executive is due to publish an assessment of bank competitiveness in July, which is likely to factor in the EBA's work. Any changes would require legislative scrutiny and take a number of years to implement.
Industry and Member State Responses
Calls for Simplification
France and Germany have urged Brussels to bring forward an ambitious "financial services simplification package" to make EU rules easier to navigate and less burdensome for firms.
Banking Sector Perspectives
Investment Gap and Growth
Europe's banks last week also urged simpler rules to help them finance growth after saying that Europe faced a widening €1.4 trillion ($1.62 trillion) annual investment gap.
International Comparisons
In some countries, particularly the United States, regulators now pushing to scale back requirements introduced after the global financial crisis and soften capital rules to boost growth.
(Reporting by Phoebe Seers in London and Jesús Aguado in Madrid;Editing by Tomasz Janowski)