February 6, 2020 / 8:41 AM / 13 days ago

Europe needs to rebalance bank buffer rules: de Guindos

FILE PHOTO: European Central Bank (ECB) Vice-President Luis de Guindos speaks during a news conference after the informal meeting of ministers for economic and financial affairs (ECOFIN) and Eurogroup in Helsinki, Finland, 13 September 2019. Lehtikuva/Emmi Korhonen via REUTERS/File Photo

FRANKFURT (Reuters) - Euro zone authorities should shift bank capital requirements, putting greater emphasis on buffers that can be released during downturns, European Central Bank Vice President Luis de Guindos said on Thursday.

“A rebalancing of the current composition of capital requirements toward a more prominent role for the countercyclical capital buffer, keeping the overall level of capital requirements unchanged, could help mitigate costly economic deleveraging during downturns,” de Guindos added.

Although banks have improved their capital positions in recent years, weak profitability makes it difficult to generate further buffers and relatively little of these could be freed up to help lenders during times of stress, he added.

Reporting by Balazs Koranyi

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