The EBA has published its final report on the implementation of capital plans following the EBA’s 2011 recommendation on the creation of temporary capital buffers to restore market confidence.
The EBA has also published a set of accompanying Questions & Answers.
The outcomes and findings of the final report are in line with the July 2012 report. The majority of banks (as of the end of June 2012) in the sample meet the required 9% Core Tier 1 ratio. The capital exercise, which triggered a deep restructuring process for four of the banks with an initial shortfall, has resulted in an aggregate EUR115.7 billion recapitalisation for 27 banks.
In the final report, the EBA also announces that it will issue a new capital conservation recommendation after the legislative proposals for the CRD IV reforms have been finalised. The recommendation will reflect measures in CRD IV on the legal setting for assessing capital levels and will require banks to:
Maintain a nominal amount of Core Tier 1 capital corresponding to the level of 9% at the end of June 2012. However, in specific cases, such as restructuring plans or de-risking, a bank may be allowed to go below the required amount of capital. Banks will be expected to refrain from using capital for strategic purposes or dividend payments and variable remuneration, unless it is agreed that they are on track to comply with CRD IV requirements.
Submit capital plans to their supervisory authority charting their "pathway" to implementing CRD IV. These plans will be shared within colleges of supervisors and with the EBA.