Overview
- The ECB proposes collapsing multiple capital buffers into two layers, with a non‑releasable buffer and a releasable buffer that authorities could deploy in downturns.
- Leverage rules would be cut to a 3% minimum plus a single buffer, which could be set to zero for smaller lenders.
- The small‑banks regime would be expanded so more institutions qualify for simpler oversight and reporting.
- The ECB outlines options to overhaul Additional Tier 1 instruments to improve loss absorption, including changes to make them behave more like equity or, more radically, removing them from going‑concern capital, a debate sharpened by Credit Suisse’s 2023 write‑down.
- EU‑wide stress tests would be redesigned to be more useful and less burdensome, and the package, endorsed by the ECB Governing Council, now goes to the European Commission with changes likely to take months or years.