This week the EBA released the results of their CRD IV – CRR Basel III monitoring exercise. This is the eleventh report of this type from the authority and covers periods up to the end of June 2016.
The report presents data from 164 banks covering 17 EU Member States (as well as Norway). The exercise showed an improvement to European banks’ capital positions with an average CET1 ratio of 12.8%, assuming full implementation of CRD IV.
One of the key objectives was to assess what impact alternative states of Basel III implementation would have on the CET1 and leverage ratios. The results show a starker contrast between current and full implementation for ‘Group 1’ banks (categorised as banks with an excess of more than €3 billion and trading internationally), where effects would be less substantial for Group 2.
To take part in the report, banks worked with supervisors to provide high quality and consistent data. The EBA commented on a significant improvement in data quality since the beginning of the monitoring exercise.
It’s worth noting that even under full implementation, all groups would retain a CET1 ratio of over 4.5%, the minimum required by the EBA under Basel III.
There has also been an improvement on NSFR (net stable funding ratio). This ratio looks at the amount of available stable funding relative to the amount of required stable funding. The EBA’s target is to have a ratio equal to or higher than 100% by January 1st 2018.
For more information about CRD IV reporting, you can visit our website.