The European Commission will propose lowering capital requirements for some
banks this week to mirror recent US and UK regulatory loosening, saying
overlapping rules from different supervisors leave EU banks at a competitive
disadvantage and force higher capital allocation. The change appears in a draft
report due Friday that outlines the scope of legislative proposals expected next
year. The draft says the Commission will propose removing leverage-related
Pillar 2 capital add-ons — discretionary extra requirements set by supervisors
such as the ECB — and urges reducing the number and size of other additional
capital buffers and improving their design and calibration.