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EC likely to propose 3% minimum leverage ratio requirement

The European Commission is likely to propose a minimumleverage ratio requirement for European banks of 3%, in line with a by the EuropeanBanking Authority and proposals by the Basel Committee on Banking Supervision,Reuters reported, citing an unnamed EU official.

"We think the 3%, or slightly above, is a good figurefor what is after all a backstop," the official told Reuters. Therequirement would likely be higher for larger banks, the official said.

Results of the latest EU-wide published by the EBA inJuly showed that the baseline leverage ratios of most of the banks will haveexceeded the 3% threshold by 2018 on a fully loaded basis, with only falling short at 2.98%.

In an adverse scenario, the leverage ratios of certainlenders such as Deutsche BankAG and SociétéGénérale SA will also fall short at 2.96% and 2.91%, respectively,while Banca Monte dei Paschi diSiena SpA's ratio would stand at negative 0.89%.

The leverage ratio requirement is part of expected proposedwider reforms of banking and capital rules in the EU that the commission willpresent by the end of the year, Reuters said Oct. 6.