EU banking package sets new requirements for Swedish banks

Economic Commentaries, News The banking package is the collective name for several coming changes to the European regulations that must be observed by banks wishing to operate in the EU. The aim of the package is to strengthen the banking sector’s resilience to financial stress.

The banking package entails comprehensive changes to the rules for the banks’ capital requirements, the banks’ long-term funding and the banks’ preparedness for managing potential crises.

The package will be implemented in stages in the EU member states over the next two years. Some parts will be directly binding in the member states, while other parts must first be implemented in each country’s national legislation.

For Swedish banks, the implications of the banking package include:

  • The introduction of a leverage ratio requirement meaning that the banks must have capital of at least 3 per cent in relation to their total exposures.
  • New rules surrounding the maturity of the banks’ funding meaning that a certain share of the banks’ lending that has a maturity of longer than one year must be funded by deposits or by market funding with a maturity of more than one year.
  • A new lowest level for the banks’ loss-absorbing capital, which requires the banks to have both sufficient capital to cover losses and sufficient eligible liabilities that can be converted into new capital should the bank encounter problems in a crisis situation.

By Camilla Ferenius and Tomas Edlund, both of whom work at the Riksbank’s Financial Stability Department.

The Riksbank’s Economic Commentaries contain, for instance, short analyses and debate articles. The opinions expressed in Economic Commentaries are those of the authors and are not to be seen as the Riksbank’s view.

Updated 20/05/2019
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