Coverage: weekly note · Information to 22 June 2026
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TGB Weekly Research Note · 22 June 2026
The European Banking Authority's review of the EU capital framework, published on 16 June 2026, proposes one releasable macroprudential buffer and a leaner MREL regime, but changes design rather than calibration and leaves the most disruptive resolution options for later.
The desk view
The European Banking Authority (EBA) report of 16 June 2026 sets out how the EU might simplify a framework in which a bank can face as many as 10 distinct capital and loss-absorbency stacks. Its recommendations are deliberately conservative: it targets design rather than calibration, keeps Pillar 2 requirements, guidance and the conservation buffer separate, and leaves the composition of capital unchanged. The main going-concern change is a single releasable buffer replacing the countercyclical and systemic risk buffers, which on a capital-neutral basis may average 1.1%. On MREL, aligning eligible resources with TLAC would trim average resources from 34.3% to 33.4% of TREA without pushing any bank below its minimum. The more radical MREL options, one of which would create a €138.5bn shortfall, are left for future consideration. Our reading is that the report relabels the stack more than it lowers it, so near-term CET1 headroom and issuance plans move little.
A framework the EBA calls robust but complex
EU banks enter this debate from a position of strength. The EBA puts the EU/EEA total capital ratio at 20.4% of TREA in December 2025, against overall capital requirements and Pillar 2 guidance of 15.9%, a gap of 4.5 percentage points. The CET1 ratio rose from 12.7% at the end of 2014 to 15.8% in December 2025. The ECB's data for significant institutions show an aggregate CET1 ratio of 15.99% in the first quarter of 2026, down from 16.26% in the previous quarter, with country ratios ranging from 13.67% in Spain to 23.44% in Lithuania.
The problem the report identifies is structure rather than level. Depending on its profile, a bank may face as many as 10 distinct stacks, from risk-based capital and the leverage ratio to TLAC, MREL and subordinated MREL, and the combined buffer requirement alone can comprise up to four buffers. The first of the EBA's four guiding principles is preserving overall resilience and capital neutrality. It focuses on design rather than calibration and does not advocate a fundamental redesign. That sets the tone: this is a tidying of the stack, not a release of capital.