EBA’s software compromise draws fire on two fronts

UK regulator suggests it will neuter the proposed capital relief, which banks say doesn’t go far enough

European Banking Authority, Paris

Photo: EBA

As it races to complete a rulemaking on the capital treatment of technology assets, the European Banking Authority may settle for a compromise that is unlikely to satisfy banks, or even some regulators.

At the urging of European lawmakers, the EBA is expected to permit bank software to be treated as a risk-weighted asset (RWA) for capital purposes, rather than being fully deducted from capital. The catch is that the prudential value of software assets will need to be amortised over two years