What it is

The total SREP capital requirement (TSCR) is a defined layer in the EBA's supervisory framework for setting bank capital. It is the sum of two elements: the Pillar 1 minimum own funds requirement, which is the same for all banks and set in legislation, and the Pillar 2 requirement (P2R), which is an additional, bank-specific and legally binding requirement set by the supervisor through the supervisory review and evaluation process. TSCR is therefore the total of a bank's binding minimum requirements, before capital buffers are added.

TSCR is a composite defined by EBA terminology rather than a single figure fixed in one article. Its value lies in giving a precise name to the binding "floor" that a bank must meet at all times, distinct from the buffers that sit above it.

The stacking order

Capital requirements are best understood as a stack. At the bottom sits Pillar 1. On top of that sits the Pillar 2 requirement, and Pillar 1 plus P2R together make up the TSCR. Adding the combined buffer requirement — which aggregates the capital conservation buffer, any countercyclical buffer, systemic-risk buffer and buffers for systemically important institutions — produces the overall capital requirement (OCR). Above the OCR, supervisors may also communicate Pillar 2 guidance (P2G), which is a non-binding expectation rather than a requirement.

The distinction between these layers is not merely presentational. The TSCR is a hard minimum: falling below it can trigger the conditions for early intervention or, ultimately, a finding that the institution is failing or likely to fail. The combined buffer, by contrast, is designed to be usable — a bank can draw it down in stress, but doing so restricts distributions through the maximum distributable amount mechanism rather than immediately threatening the institution's authorisation.

TSCR is EBA supervisory terminology used to describe how requirements set under existing legislation fit together. Its components derive from the Capital Requirements Regulation for the Pillar 1 minimum and from the Capital Requirements Directive for the Pillar 2 requirement, imposed through the supervisory review and evaluation process, with the combined buffer requirement also set out in the Directive. Because TSCR is a composite label rather than a standalone legal instrument, citations should point to those underlying provisions and to the EBA SREP guidelines.

Relevance for resolution and investors

TSCR marks the boundary between a bank's usable buffer and its non-negotiable minimum. In the crisis-management framework this matters because breaching the minimum requirements, rather than merely dipping into buffers, is what moves a firm toward early intervention and potentially toward the point of non-viability. The relationship between TSCR, the combined buffer and the OCR also frames how much headroom a bank has before distribution restrictions bite.

For investors, the position of a bank's capital ratio relative to its TSCR, OCR and MDA thresholds is a key signal. Holders of AT1 and other distribution-sensitive instruments watch the buffer above these levels closely, because it determines the risk of coupon cancellation and the distance to any supervisory intervention.