On 2 October 2019, the European Banking Authority (EBA) published two reports that monitor the impact of implementing the final Basel III reforms and the current implementation of liquidity measures in the EU.
The latest EBA Basel III capital monitoring report provides an assessment of the impact of the full implementation of the final Basel III reforms on EU banks. The report also presents the evolution of the Common Equity Tier 1, Tier 1 and additional Tier 1 minimum required capital impacts, and the associated capital shortfalls. Overall the EBA estimates that the Basel III reforms, once fully implemented, would determine an average increase by 19.3% of EU banks’ Tier 1 minimum required capital. To comply with the Pillar 1 requirements in the new framework, EU banks would need EUR 26 billion of additional total capital, of which EUR 24.9 billion of Tier 1 capital.
The report on liquidity measures evaluates the liquidity coverage requirements currently in place in the EU. The report provides an update of EU banks’ compliance with the liquidity coverage ratio (LCR), defined as the stock of high quality liquid assets over the net liquidity outflows arising during a 30 calendar day stress period. Overall at end-December 2018 the weighted average LCR across the sampled EU banks stood at 149%, which implies ratios well above the minimum LCR requirement of 100%. Compliance with the ratio has steadily improved since September 2016 when data first became available.