EU banks with thinnest buffers tap heftiest IFRS 9 capital add-backs

EBA data shows lenders whose capital benefitted most from transitional loan-loss relief also have skinniest CET1 capital ratios

European Union banks that benefitted the most from IFRS 9 loan-loss relief also have the thinnest solvency ratios, European Banking Authority (EBA) data shows.

The temporary ability to add back to capital to offset provisions booked under the new framework has proved a boon to lenders in the bloc’s economic periphery. At Greece’s Piraeus, for example, such transitional adjustments made up 21% of the bank’s Common Equity Tier 1 (CET1) reserves at end-June, according to the EBA.

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