EBA report on simplifying the stacking orders of the EU prudential and resolution framework

The European Banking Authority (EBA) has published a report proposing targeted simplifications to the EU bank capital framework, following a holistic review of the microprudential, macroprudential and resolution capital regime in the EU ("stacking order"). The report forms part of the EBA's broader priority of simplifying and enhancing the efficiency of the regulatory and supervisory framework under its 2026 work programme and follows its earlier report in October 2025 on the efficiency of the regulatory and supervisory framework.

The EBA does not advocate a fundamental redesign but instead recommends potential adjustments to reduce complexity and improve consistency, predictability and effectiveness while preserving the acquired resilience of the European banking system. Recommendations in the report follow four guiding principles: preserving overall resilience and capital neutrality; adhering to international standards; ensuring proportionality; and enhancing the efficiency and depth of the Single Market.

Key recommendations include:

• Microprudential stack. Preserving most elements of the current microprudential toolkit, including Pillar 1, Pillar 2 requirements and Pillar 2 guidance while clarifying and strengthening their respective roles. The report also recommends streamlining the leverage ratio stack by converting its Pillar 2 requirement into a buffer and removing its Pillar 2 guidance. In addition, the EBA suggests removing macroprudential considerations from the microprudential stack.
• Macroprudential stack. Streamlining the macroprudential part of the framework by introducing a single releasable macroprudential buffer combining the countercyclical capital buffer and systemic risk buffer, supported by a high-level common methodology. The EBA also suggests updating the other systemically important institutions (O-SIIs) framework, including the common methodology for O-SII scoring and considering further guidance on O-SII buffer calibration.
• Resolution stack. Simplifying the resolution part of the framework by aligning the definitions of total loss-absorbing capacity (TLAC) eligible resources and the minimum requirement for own funds and eligible liabilities (MREL) eligible resources and simplifying existing MREL adjustment calculations. The EBA also suggests linking MREL to a single subordinated MREL metric, introducing a uniform minimum (Resolution Pillar 1) with an institution-specific component (Resolution Pillar 2), and amalgamating going-concern and gone-concern requirements into a single stack.

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