ECB’s stress capital buffer still a ‘black box’ – banks

National regulators retain wide latitude to set Pillar 2 Guidance under new rules

European Central Bank, Frankfurt

The European Central Bank’s new Pillar 2 Guidance (P2G) methodology still gives supervisors too much discretion to set non-binding capital add-ons, banks argue, and could result in diverging standards across the eurozone.

The ECB unveiled a two-step process for determining European Union banks’ P2G levels on July 30 – the same day the European Banking Authority (EBA) released the results of its biennial stress tests. Banks will be placed into four buckets, depending on how they perform in the