Higher volatility and widening spreads in sovereign yields slowing progress of Eurozone banks

Under international and EU banking rules, major banks must issue a special loss-absorbing debt known as TLAC that can be converted to capital if a crisis burns through their core capital buffer.

Eurozone banks have not made enough progress in raising loss-absorbing capital and now may face more difficult market conditions due to higher volatility and widening spreads in sovereign yields, the bloc's banking watchdog said on Monday.

"Not enough progress has been made there," European Banking Authority's chair Andrea Enria told a banking conference in Brussels, warning that the problem concerned large and medium banks, but not the biggest systemic lenders who are instead "very close to being fully compliant."

Under international and EU banking rules, major banks must issue a special loss-absorbing debt known as TLAC that can be converted to capital if a crisis burns through their core capital buffer.