ESRB Receives Notification on Level of Systemic Risk and O-SII Buffers

PRA notified the mentioned EU authorities about the systemic risk buffer rates for ring-fenced banks (RFBs) and large building societies. PRA has set systemic risk buffer rates for RFBs in five RFB sub-groups—Lloyds Banking Group RFB sub-group, Royal Bank of Scotland RFB sub-group, Barclays RFB sub-group, HSBC RFB sub-group, and Santander UK RFB sub-group—and these systemic risk buffer rates apply to all exposures, on a sub-consolidated basis. PRA has set a systemic risk buffer rate for the Nationwide Building Society at 1%, which applies to all exposures, on a consolidated basis. The systemic risk buffers will apply in full from July 30, 2019. This is the PRA’s first setting of the SRB rates and these rates are expected to be applied until December 31, 2020. PRA expects to review the SRB rates annually, to announce the SRB rates by December 15 of each year, and to require institutions to apply the rates on an ongoing basis by January 01 of the second year ,following the calendar year when the rates were announced. PRA will base its decision of SRB rates on the total assets of the RFB or the building society at the end of the previous calendar year.

Additionally, FIN-FSA notified that it will continue with the existing systemic risk buffers. The systemic risk buffer applies to all credit institutions authorized in Finland at the level of 1.0 % while the systemic risk buffer has been specifically set at 3.0% for Nordea Group, 2.0% for OP-Group, and 1.5% for Municipality Finance Plc. The systemic risk buffer is applied on a consolidated level. Additionally, FIN-FSA assessed the appropriateness of the O-SII buffer as required by law and decided to maintain the level of O-SII buffer at 2.0% for Nordea Group and OP-Group and at 0.5% for Municipality Finance Plc.

Related Links

• Notification by PRA on Systemic Risk Buffer (PDF)
• Notification by FIN-FSA on Systemic Risk Buffer (PDF)
• Notification by National Bank of Slovakia on Systemic Risk Buffer (PDF)
• Notification by Central Bank of Hungary on Systemic Risk Buffer (PDF)
• Notification by FIN-FSA on O-SII (PDF)
• Notification by National Bank of Slovakia on O-SII (PDF)

Keywords: Europe, UK, Finland, Slovakia, Hungary, Banking, Systemic Risk Buffer, O-SII, Macro-Prudential Measures, Systemic Risk, FIN-FSA, PRA, EBA, ECB, ESRB