ECB keeps capital requirements broadly steady for 2025, reflecting strong bank performance amid heightened geopolitical risks
- 17 December 2024, 09:30 CET
The European Central Bank (ECB) today decided to keep capital requirements for banks broadly unchanged for 2025. This decision takes into account the continued resilience of the banking sector and the current heightened geopolitical risks.
The ECB’s capital requirements are designed to ensure that banks have sufficient capital to absorb losses and continue lending to the economy, even in times of stress. The requirements are based on a number of factors, including the riskiness of banks’ assets, their funding structure, and their overall financial strength.
The ECB’s assessment of the banking sector found that banks have continued to perform well despite the challenges posed by the COVID-19 pandemic and the war in Ukraine. Banks have maintained healthy levels of capital and liquidity, and their profitability has improved. However, the ECB also noted that the current geopolitical risks could have a negative impact on the economy and the banking sector.
In light of these factors, the ECB decided to keep capital requirements broadly unchanged for 2025. The requirements will remain at the current level of 8% for the Common Equity Tier 1 (CET1) ratio, which is the most important measure of a bank’s capital strength. The ECB also decided to keep the capital buffer for systemically important banks (G-SIIs) at 1%, and the countercyclical capital buffer (CCyB) at 0%.
The ECB’s decision to keep capital requirements broadly unchanged is a signal that the ECB believes that the banking sector is well-positioned to withstand the current challenges. However, the ECB will continue to monitor the situation closely and will make adjustments to the capital requirements if necessary.
For media queries, please contact: Media Relations Division Tel.: +49 69 1344 7455 Email: media@ecb.europa.eu
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