BRUSSELS, Oct 6 (Reuters) - The European Commission is likely to propose that European banks hold capital equal to at least 3 percent of their debt in a planned overhaul of EU banking rules, due in the next few weeks, an EU official said on Thursday.
That ratio tallies with a recommendation in August from the European Banking Authority (EBA) and is also in line with proposals by the Basel Committee of global banking regulators.
“We are likely to propose a 3 percent leverage ratio,” the official said. “We think the 3 percent, or slightly above, is a good figure for what is after all a backstop.”
Deutsche Bank, ABN Amro and Societe Generale were among European banks found with a leverage ratio slightly below 3 percent in the latest EU-wide banking stress test published by the EBA in July.
Separately, International Monetary Fund Managing Director Christine Lagarde said on Thursday that Deutsche must look at its business model but that it is not the only bank that needs to do so.
Italy’s Banca Monte dei Paschi was the only lender with a negative leverage ratio under the test’s adverse scenario based on banks’ balance sheets in December 2015.
Larger banks were likely to be required to hold capital above 3 percent, the official said, also in line with Basel Committee recommendations.
The European Central Bank, as the supervisor of euro zone lenders, will maintain the power to impose higher requirements on specific banks, but will not be able to apply a ratio different from 3 percent “across the board”, the official said.
The Brussels-based EU Executive will present its legislative proposal “by the end of the year”, as part of expected wider reforms of EU banking and capital requirement rules meant to introduce deals agreed at global level into EU legislation.
The legislative package is in the Commission’s agenda on Nov. 16, but may be pushed back to later this year, Commission officials said.
The package will not include a revision of banks’ internal models to calculate risk and other elements of a further reform of global banking rules still under discussion at the Basel Committee. (Reporting by Francesco Guarascio; Editing by Louise Ireland)