FIN-FSA Decides to Impose Systemic Risk Buffer on Credit Institutions
The Board of the Finnish Financial Supervisory Authority (FIN-FSA) has decided to impose, on credit institutions, a structural additional capital requirement in the form of the systemic risk buffer. The buffer will strengthen the risk absorbency of credit institutions for structural systemic risks. It will be imposed on Nordea at a level of 3.0%, on Op Group at 2.0%, on Municipality Finance Plc at 1.5%, and on other Finnish credit institutions at 1.0%.
For Nordea, OP Group, and Municipality Finance Plc, the systemic risk buffer has been set higher than the others because their contribution to systemic risks is particularly large and their notional impact on the indicators examined as justification for a systemic risk buffer is substantial. Marja Nykänen, Chair of the Board of the FIN-FSA, says that the structural systemic risks are so high in the financial system in Finland that it is justified to impose a systemic risk buffer on all credit institutions. In addition to the systemic risk buffer, the additional capital requirements for global (G-SII/B) and national (O-SII) systemically important credit institutions were reviewed.
The decision was made to identify Nordea as a global systemically important credit institution (G-SII/B) and to impose on Nordea an additional capital requirement of 1.0%. The decision complies with the recommendation of FSB. FIN-FSA has identified the systemically significant credit institution for Finland (O-SIIs) and has imposed on them additional capital requirements as follows: Nordea 2.0%, OP Group 2.0%, and Municipality Finance Plc 0.5%. Of the additional capital requirements imposed, only the highest (in this case the systemic risk buffer) are obligatory. Within the banking union, the level of the tsystemic risk buffer has currently been set at 3% at most, even though a number of credit institutions operating in the banking union are, overall, larger and, from the perspective of the financial stability of the whole banking union, more significant than Nordea.
Related Links
Keywords: Europe, Finland, Banking, Systemic Risk Buffer, G-SIB, O-SII, ESAs, FIN-FSA
Featured Experts
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
EIOPA Publishes Risk Dashboard for the Third Quarter of 2018Related Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
