The Basel III output floor on modelled capital requirements will become the binding regulatory constraint for four out of 10 European banks sampled in a Basel Commitee report.

The committee estimates that the new output floor – which bars banks from reducing their modelled capital requirements below 72.5% of the amount generated by the revised Basel III standardised approach by 2027 – will impose the single largest Tier 1 capital requirement on 41.4% of European banks sampled.

Currently, the