EBA proposes comprehensive simplifications to the EU bank capital framework

The European Banking Authority (EBA) continues its effort to simplify and improve the efficiency of the EU bank capital framework. Following earlier proposals to reduce reporting burdens and simplify stress tests, the EBA has published a comprehensive review of the microprudential, macroprudential, and resolution capital requirements.

The proposals aim to reduce complexity while maintaining banks’ resilience and resolvability, and ensuring the framework remains focused on emerging and material risks. The review builds on previous reports from July 2024 and October 2025, providing an overview of the implementation of capital requirements and buffers over the past decade.

The EBA recommends adjustments to improve consistency, predictability, and effectiveness without weakening the resilience of the banking system. The proposals are guided by principles of preserving overall resilience and capital neutrality, adherence to international standards, proportionality, and enhancing the Single Market.

Key simplification measures include:

• Microprudential stack: Clarifying roles of Pillar 1, Pillar 2 requirements, and Pillar 2 guidance; focusing supervisory tools on institution-specific and emerging risks; removing macroprudential considerations; simplifying the leverage ratio by converting Pillar 2 requirement into a buffer and removing guidance.

• Macroprudential stack: Combining the countercyclical capital buffer (CCyB) and systemic risk buffer (SyRB) into a single releasable buffer supported by a common methodology; updating the O-SII framework with enhanced scoring and buffer calibration.

• Resolution stack: Streamlining the MREL framework, aligning definitions of TLAC and MREL resources, reducing metrics, and simplifying adjustments to lower operational complexity.

The report emphasizes coordination among authorities but does not detail it. Overall, it aims to reduce regulatory layers and improve the effectiveness of the EU banking regulation framework.