The sovereign-bank nexus continues to endanger the stability of the euro area. We present a proposal how to mitigate spillovers of risks from sovereigns to banks. It encompasses risk-based large exposure limits and risk-adequate capital requirements, with the large exposure limits being most important – both conceptually and empirically. Based on a recent snapshot of banks’ sovereign exposures, our analysis shows that the introduction of large exposure limits would necessitate substantial portfolio shifts. In contrast, additional capital requirements would imply rather small additional capital buffers. Our proposal also suggests how to mitigate procyclicality, inherent to large exposure limits.