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EC 'Basel 4' Proposals Confirmed As More Manageable than Earlier EBA Assessments

According to estimates provided by the European Banking Authority (EBA), "this impact could lead a limited number of large institutions to have to raise collectively additional capital amounts of less than EUR 27bn in order to meet the new minimum capital requirements under the preferred option."

Regarding dividends, @JonPeace reports that the Commission noted that the ECB had judged that it did not need additional power to restrict dividends. “At the current juncture, the Commission, therefore, does not see a need for additional supervisory powers to be granted to the competent authorities to impose restrictions on distributions by institutions in exceptional circumstances. The issue of macroprudential oversight and coordination of such restrictions in exceptional circumstances in the future will be considered in the forthcoming review of the macroprudential framework.”

The lengthy documents note that to “signal our commitment to our international partners in the G20, it is of utmost importance to implement the outstanding elements of the Basel III reform faithfully. At the same time, the implementation should avoid a significant increase in overall capital requirements for the EU banking system on the whole and take into account the specificities of the EU economy. Where possible, adjustments to the international standards should be applied on a transitional basis. The implementation should help avoid competitive disadvantages for EU institutions, in particular in the area of trading activities, where EU institutions directly compete with their international peers.