EU banks set for 6.7% capital hike on output floor tweaks removal

Unwind of EU-specific transitional arrangements could suddenly inflate Tier 1 risk-based charges, EBA analysis suggests

European Union banks face a steep increase in charges linked to the Basel III output floor on modelled capital requirements once residual bloc-specific transitional arrangements start to expire between 2030 and 2033, a European Banking Authority (EBA) analysis suggests.

The output floor bars banks from reducing their modelled capital requirements below 72.5% of the amount generated by the revised standardised approach.

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