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nid 93257
Jun 16, 2026
adavies@vixio.com
European Union
European Banking Authority
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2142 charsEuropean Banking Authority Proposes Simplifications to EU Bank Capital Framework
On June 16, 2026, the European Banking Authority (EBA) published a comprehensive review proposing simplifications to the European Union's bank microprudential, macroprudential, and resolution capital framework. The proposals aim to reduce complexity while preserving banks' resilience and resolvability and ensuring regulatory authorities retain their supervisory tools.
The EBA's recommendations build on its July 2024 description of the capital regime "stacking order" and its October 2025 Report on the Efficiency of the Regulatory and Supervisory Framework (TFE report). The EBA proposes a simpler microprudential stack by clarifying the roles of Pillar 1, Pillar 2 requirements (P2R), and Pillar 2 guidance (P2G); sharpening supervisory focus on institution-specific and emerging risks; removing macroprudential considerations from the microprudential stack; and simplifying the leverage ratio stack by converting the leverage ratio Pillar 2 requirement into a buffer and removing leverage ratio guidance. For the macroprudential stack, the EBA recommends combining the countercyclical capital buffer (CCyB) and systemic risk buffer (SyRB) into a single releasable buffer supported by a high-level common methodology and updating the other systemically important institutions (O-SII) framework. For resolution requirements, the EBA proposes streamlining the Minimum Required Own Funds and Eligible Liabilities (MREL) framework by aligning definitions of Total Loss-Absorbing Capacity (TLAC) and MREL eligible resources, reducing metrics, and simplifying adjustments.
The recommendations are assessed against four guiding principles: preserving overall resilience and capital neutrality; adhering to international standards; ensuring proportionality; and enhancing efficiency and depth of the Single Market. The report does not advocate fundamental redesign but rather targeted adjustments to improve consistency, predictability, and effectiveness. This publication represents the third major milestone in the EBA's "Simplifying to strengthen" communication campaign on building a more efficient EU prudential and supervisory framework.
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1703 charsEuropean Banking Authority Publishes Review of the Bank Prudential Framework
On June 16, 2026, the European Banking Authority (EBA) published a report providing a comprehensive review of the EU bank microprudential, macroprudential and resolution capital framework. The report also provides proposals to simplify the framework.
The report provides proposals to streamline the EU capital framework without reducing resilience or weakening supervisory action. Specifically, the EBA recommends the following measures:
Simpler microprudential stack: To sharpen the focus of supervisory tools on institution-specific and emerging risks. To remove macroprudential considerations from the microprudential stack. To simplify the leverage ratio (LR) stack by converting the LR pillar 2 requirement into a buffer and removing the LR guidance.
To sharpen the focus of supervisory tools on institution-specific and emerging risks.
To remove macroprudential considerations from the microprudential stack.
To simplify the leverage ratio (LR) stack by converting the LR pillar 2 requirement into a buffer and removing the LR guidance.
Simpler macroprudential stack: To combine the current countercyclical capital buffer (CCyB) and the systemic risk buffer (SyRB) into a single releasable buffer. To update the O-SII framework.
To combine the current countercyclical capital buffer (CCyB) and the systemic risk buffer (SyRB) into a single releasable buffer.
To update the O-SII framework.
Simpler resolution stack: To streamline the minimum requirement for own funds and eligible liabilities. Framework, including the alignment of eligible resources.
To streamline the minimum requirement for own funds and eligible liabilities. Framework, including the alignment of eligible resources.