Banking package of the EU Commission

The EU Commission presented a series of new regulations for banks in a comprehensive package of measures

The package includes, inter alia, the introduction of a Leverage Ratio of 3% and a Net Stable Funding Ratio (NSFR). The Leverage Ratio is designed to prevent banks from over-indebtedness, while the NSFR is intended to help reduce long-term financing risks.

In addition, the Commission intends to improve the resolvability of stumbling banks. To this end, they are to provide sufficient equity to enable them to be resolved within a severe crisis (TLAC and MREL requirements). The aim is that such resolutions can ultimately be carried out without using tax payers money, while at the same time not jeopardizing the stability of the financial markets.

Other key aspects of the package are the lowering of capital requirements, which are designed to boost lending to small and medium-sized enterprises and to increase investments in infrastructure.