ECB Backs Simpler, Not Looser Bank Rules

• The European Central Bank (ECB) will propose simplifying rules on capital buffers required of banks, pruning some of the complex regulation put in place after the global financial crisis, two sources familiar with the proposals told Reuters.
• The list of measures that ECB Vice-President, Luis de Guindos, will present to reporters on Thursday, December 11, 2025, aims for fewer, rather than lower, requirements for the amount of capital lenders must hold to cushion themselves against potential shocks. That is a more conservative approach than regulators in Britain and the United States have taken recently and may disappoint bankers who had been hoping for more respite.
• The recommendations, the result of a compromise between different European Union (EU) countries, would merge the systemic risk buffer (SyRB) and countercyclical capital buffer (CCyB), two separate capital requirements set by national supervisors, said the two sources.
• The SyRB and CCyB buffers were introduced by the 27-nation EU as part of a post-crisis overhaul aimed at preventing another banking sector meltdown like that seen in 2007-2008. Bankers complain these rules are too complex and put them at a disadvantage to U.S. peers, particularly at a time when Donald Trump's U.S. administration is leading a drive to deregulate.
• Financial experts said simplification was more than welcome as the current system has become too complex, but this should not lead to banks having to hold less capital. "The messaging from the ECB has been very consistent so far, that there is room to simplify the framework, but that this should not lead to less capital at a system level. I welcome this approach," said Marco Troiano, a director at Scope Ratings.
• The ECB recommendations will next go to the executive European Commission, which shares the power to propose changes to EU legislation with the European Parliament and Council, on which member states sit. Such changes would take years and could reopen long-standing debates over how far Europe should go on loosening regulations designed to shield taxpayers from having to bail out ailing banks.

(Source: Reuters