EBA publishes report on the Basel III finalization implementation impact

The assessment results show that by 2028, as the full implementation comes to force, the required minimum Tier 1 capital will increase by 15% on average, without considering EU-specific adjustments, and 16% for large and internationally active banks.

Excluding the leverage ratio contribution, the full impact of the implementation will be 18%, including output floor (6.3%) and credit risk (4.4%). The G-SIB banks will experience the largest impact, with a requirement increase of up to 23%.

The sample size covers 86 banks that continuously reported the appropriate data over the previous three years. The analysis includes the impact of the pandemic with the reference day of December 2021. The sample is significantly larger compared to the last few years and applies the same methodology as the BCBS. The analysis includes the economic impact of the Covid-19 pandemic on participating banks that materialized up to December 2021.

The effect is more significant than measured in December 2020 due to the increase in market risk however, it is still on a decreasing trend compared to the pre-Covid period.