EU lawmakers’ demand for local capital floors alarms banks

Multiple output floors applied to each entity raises fears of capital increase for large groups

A large number of European Union member states are objecting to European Commission plans to apply a floor on capital requirements at group level only. The national governments instead want banks to calculate the floor on each individual entity within their group, as well as at the parent company. Bankers say this approach will lead to higher capital requirements overall.

“It is very inefficient for a group if it is limiting how we can distribute internally our capital,” says a senior