At the end of each month, the SAFE Regulatory Radar highlights a selection of important news and development on financial regulation at the national and EU level.
Bank capital framework: the EBA proposes to simplify the stacking order
On 16 June 2026, the European Banking Authority (EBA) published a report on simplifying the “stacking orders” of the EU prudential and resolution framework: the way microprudential requirements, macroprudential buffers and resolution requirements are layered. It is the third milestone of the EBAs “Simplifying to strengthen” campaign and builds on the EBA’s July 2024 descriptive report on the EU capital stack and its Report on the efficiency of the regulatory and supervisory framework of 1 October 2025. The EBA’s premise is that simplification should improve the usability and consistency of the capital stack without lowering aggregate resilience. It therefore conditions reform on capital neutrality, continued compliance with the Basel Framework and Financial Stability Board standards, and proportionality for both large and smaller institutions.
- Microprudential stack: The EBA proposes to retain the risk-based minimum capital requirements of Pillar 1, and the Pillar 2 requirement (P2R) and Pillar 2 guidance (P2G) while clarifying their respective roles. Pillar 2 tools would be focused more tightly on institution-specific and emerging risks. The EBA does not recommend merging P2R, the capital conservation buffer and P2G, and does not propose changing the composition of own funds. The main structural change is limited to the leverage-ratio stack: leverage-ratio P2R would become a buffer, and leverage-ratio P2Gwould be removed. Macroprudential risks would no longer be addressed through the microprudential stack.
- Macroprudential stack: The EBA proposes to consolidate the countercyclical capital buffer (CCyB) which was introduced under the Basel III framework and the EU-specific systemic risk buffer (SyRB) into a single releasable buffer. Underpinned by a common methodology, this single macroprudential buffer would fulfill the functions of a positive releasable buffer in normal times, of cyclical adjustments in reaction to macro-financial risk changes, and the recognition of systemic risk and exposure.
- Resolution stack: For the minimum requirement for own funds and eligible liabilities (MREL), the EBA proposes targeted simplifications, including closer alignment between total loss-absorbing capacity and MREL eligible resources and simpler MREL adjustment calculations. More structural options — such as linking MREL to a single fully subordinated metric, introducing a “Resolution Pillar 1” and “Resolution Pillar 2” split, or merging going-concern and gone-concern requirements into one stack — are presented only for possible future consideration.
The report is a contribution to the policy debate on banking simplification. SAFE researchers Loriana Pelizzon and Vincent Lindner also contributed a paper on macroprudential complexity to a European Commission workshop in November 2025.
Market risk: the Commission grants temporary, targeted relief on the Fundamental Review of the Trading Book
On 4 June 2026, the European Commission adopted a Delegated Regulation amending the Capital Requirement Regulation (CRR) with temporary, targeted measures for banks’ own-funds requirements for market risk under the Fundamental Review of the Trading Book (FRTB), accompanied by explanatory questions and answers.
Under the 2024 banking package (CRR III and CRD VI), all other Basel III standards have applied since 1 January 2025, leaving the FRTB as its final outstanding component. The FRTB is the post-2008 overhaul of how banks measure the capital they must hold against losses on their trading positions and generally raises the capital they must hold against it. With the FRTB already deferred twice, most recently to 1 January 2027, the Commission has exhausted its deferral power under the CRR and instead invoked the amendment power in Article 461a CRR to recalibrate the rules rather than postpone them again. The trigger is international divergence, in particular the United States’ and the United Kingdom’s respective decisions to not apply the FRTB from 1 January 2027, and the Commission casts its decision as safeguarding EU banks' competitiveness. Article 461a exists to ensure an international level playing field where third-country implementation diverges significantly, and the Commission judges that delays by major jurisdictions risk competitive distortions for EU banks operating in global markets.
The delegated act changes the FRTB transition through three sets of measures:
- Internal model approach: The profit-and-loss attribution test is temporarily treated as a monitoring tool rather than as a direct trigger for capital consequences. The act also makes the non-modellable risk-factor framework more operational, including by easing the treatment of risk factors for newly issued or newly created instruments, and introduces further operational relief for sovereign default risk, calculation frequency and collective investment undertaking exposures.
- Standardized approaches: The act phases in selected requirements that are affected by international implementation gaps. Institutions apply a 0.9 multiplier to the sensitivities-based method and the simplified standardized approach until 31 December 2029. It also provides targeted relief for collective investment undertaking exposures, EU emissions trading system exposures, hedged equity exposures and certain small trading-book institutions.
- Bank-specific offset multiplier: institutions whose market-risk own-funds requirements would rise under FRTB, even after the targeted amendments, may apply an optional bank-specific multiplier until 31 December 2029. The multiplier is recalibrated every three months and is designed to bring the institution’s FRTB market-risk requirement back to its pre-FRTB level, taking account of the output floor. Banks using it must notify supervisors and continue reporting and disclosing their pre-FRTB market-risk requirements.
The measures are designed to apply from 1 January 2027 until 31 December 2029. The delegated act is subject to a three-month scrutiny period by the European Parliament and the Council, extendable by a further three months; if neither objects, it enters into application on 1 January 2027.
Updates
- On 11 June 2026, the EBA published the draft methodology, templates and template guidance for the 2027 EU-wide stress test and opened an early industry consultation. The draft methodology reduces required data points by about 55% compared with the previous exercise, mainly by relying more on regular supervisory reporting, in line with the reporting-simplification agenda discussed in the SAFE Regulatory Radar in May 2026. For the first time, the stress test also includes a dedicated climate-risk module, covering transition shocks and a riverine-flood physical-risk scenario over a three-year horizon.
- On 11 June 2026, the European Parliament’s ECON committee published draft reports on all three files (Master Regulation, Master Directive, Settlement Regulation) of the Commission’s Market Integration and Supervision Package (MISP), a central legislative pillar of the Savings and Investments Union which aims to centralize financial market supervision. Correspondingly, the six finance ministers of the largest EU economies also agreed on a common position on 28 May 2026 at a meeting in Berlin. MISP was first covered in the SAFE Regulatory Radar in December 2025.
- On 9 June 2026, European Parliament and Council negotiators reached a provisional agreement (Council statement) on the “small mid-cap” (SMC) and digitalization files of the fourth Omnibus simplification package. The agreement creates a new small mid-cap category for firms with fewer than 1,000 employees and either up to €200 million in turnover or up to €172 million in total assets.
- On 3 June 2026, the European Supervisory Authorities published their first annual report on major information and communication technology-related incidents under the Digital Operational Resilience Act (DORA). The report highlights the systemic relevance of outsourcing and third-party dependencies and the need to maintain strong cyber resilience as artificial intelligence increases the scale and sophistication of potential threats. For earlier SAFE coverage of DORA implementation, see the SAFE Regulatory Radar in March 2024.
Public consultations
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Sara Fadavi is Financial Policy Analyst in the SAFE Policy Center.
