ECB Lowers Capital Bar for Banks After Strength in Stress Test

The European Central Bank slightly lowered the amount of capital that it tells banks to hold, supporting their capacity to make shareholder payouts after sailing through a financial health check earlier this year.

On aggregate, banks will see their minimum bar for common equity Tier 1 capital fall to 11.2% of their risk-weighted assets next year from 11.3% in 2025, the ECB said in a statement on Tuesday in Frankfurt. The industry exceeds that level by a wide margin, with a weighted average CET1 ratio of 16.1% in June.

European banks continue to benefit from the end of negative interest ...