European Banks: Citi European Banks Weekly

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European Banks: Citi European Banks Weekly

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European Banks

Citi European Banks Weekly 06 Jul 2026 05:36:43 ET

ACWestern Europe Andrew Coombs, CFA

Focus +44-20-7986-4053

Last week, Reuters had reported (30 June) the ECB is considering doubling bank minimum Simon Nellis

reserve requirements (MRR), from 1% of deposits to 2%, but notes this is yet to be formally

+44-20-7986-4012

discussed by the General Council and any decision is not expected until the

Autumn. Subsequently we’ve published a short note European Banks - Impact of Increasing Borja Ramirez Segura

Minimum Reserve Requirement. All else held equal this would result in the loss of €4.3bn of +44-20-7508-0206

income, equivalent to 1.0% of sector NII and 1.7% of sector PBT. Among our coverage

Shrey Srivastava

universe ABN and Deutsche Bank appear to be most impacted, with an implied theoretical

+44-20-7986-26081.9% and 1.6% hit to 2027 earnings.

The BoE FSR is to be released on Tuesday 7 July at 10.30am, with a briefing to follow at

3:30pm. We have published a report on UK Banks - Could UK Bank Capital Requirements

Be Eased This Week? Expectations are rising that new proposals may be issued with regard

to both the composition of CET1 ratio and leverage ratio requirements, following a series of

consultations. We expect any changes to be marginal, but on balance supportive for the

industry, with NatWest & Lloyds best placed to benefit on any CET1 ratio changes and

Santander UK & Barclays best placed to benefit on any change to leverage ratios.

It's worth noting, we’ve published a detailed report on Banco Santander (SAN.MC) - SAN’s

funding advantage: an underappreciated earnings driver. We believe SAN's improving

funding profile is an underappreciated driver of earnings resilience. Openbank, together with