ECB vice-president says cutting bank capital rules won't boost lending
A speech by ECB vice-president Boris Vujčić to the ESRB's tenth annual conference sets out the ECB's position in the ongoing EU debate over bank capital requirements and competitiveness. It matters to compliance and prudential teams because it signals how the ECB will respond to industry and political pressure to loosen capital rules, and details specific simplification proposals already on the table.
- The median Tier 1 capital ratio for euro area banks has more than doubled, from around 8% in 2009 to more than 16% today.
- The ECB's supervisory arm is discontinuing around 40 guidance documents out of more than 100 as part of simplification measures.
- Cross-border bank lending to non-financial firms within the euro area accounts for only around 16% of total corporate lending, versus about 20% for lending to borrowers outside the euro area.
- The Governing Council's end-2025 recommendations propose merging existing capital buffers into a non-releasable buffer and a releasable buffer, and reducing the leverage ratio framework from four elements to two.
- The average price-to-book ratio for euro area banks is now around 1.5, up from levels below 1 in the earlier low-profitability period.