The European Banking Authority (EBA) has found that EU lenders are €135bn of the capital buffers required by new international regulations.
The EBA announced on Tuesday that new Basel IV regulation requires from European lenders to bolster their capital buffers by 24,4%. The shortfall affects almost exclusively large systemic lenders.
The EBA has recently relocated from London to Paris, ahead of Brexit, and is expected to oversee the application of financial regulation across the EU. The new regulatory regime will also standardise risk-assessment for key credit markets, such as mortgage lending.
The demand to bolster capital buffers amidst a decelerating economy could have negative consequences as banks may be forced to reduce credit to comply.