The European Banking Authority has published a comprehensive review of the EU bank microprudential, macroprudential and resolution capital framework, setting out targeted simplification proposals rather than a fundamental redesign. The report aims to reduce complexity and improve consistency, predictability and effectiveness while preserving banks’ resilience and resolvability, maintaining authorities’ tools and keeping the framework focused on emerging and materially evolving risks. The EBA says the recommendations are assessed against four principles: preserving overall resilience and capital neutrality, adhering to international standards, ensuring proportionality and enhancing the efficiency and depth of the Single Market. In the microprudential framework, the EBA recommends preserving Pillar 1, Pillar 2 requirements and Pillar 2 guidance while clarifying their roles, sharpening their focus on institution-specific and emerging risks, and removing macroprudential considerations from the microprudential stack. It does not recommend merging P2R, the capital conservation buffer and P2G, and it does not propose changing the composition of capital. For leverage requirements, it proposes converting the leverage ratio Pillar 2 requirement into a buffer and removing leverage ratio guidance. In the macroprudential framework, it recommends combining the countercyclical capital buffer and systemic risk buffer into a single releasable buffer supported by a high-level common methodology, and updating the O-SII framework through enhancements to the scoring methodology and possible buffer calibration changes. In the resolution framework, it recommends streamlining MREL by aligning definitions of TLAC and MREL eligible resources, replacing the 8% TLOF input used for subordination with an equivalent TEM-based measure, simplifying and standardising adjustments, and exploring a specific cooperation framework between resolution and competent authorities for MREL breaches. Other options, including a single fully subordinated metric, a TLAC-style floor plus institution-specific component, and a one-stack approach, are discussed but not recommended at this stage. The report is linked to the revision of the Supervisory Review and Evaluation Process Guidelines, which was consulted on in October 2025 and for which a final report is forthcoming. The EBA also said work is underway on analysing coordination among public authorities to complement the present work on the design of the instruments.
European Banking Authority2026-06-16
European Banking Authority proposes simplified EU bank capital framework including a single releasable macro buffer and streamlined MREL
The European Banking Authority has published a report proposing targeted simplifications to the EU bank capital and resolution framework without a fundamental redesign. It recommends preserving the core microprudential toolkit, merging the CCyB and SyRB into a single releasable buffer, and streamlining MREL through closer alignment with TLAC and simpler calibration. Separate work on authority coordination is underway, and the proposals are linked to the forthcoming final revision of the SREP Guidelines.