FI on Capital Rules for Banks and Reporting Rules for Investment Firms
The Swedish Financial Supervisory Authority (FI) issued new regulations on reporting requirements for investment firms, in accordance with the Investment Firms Regulation and Directive (IFR and IFD). FI will inform when test reporting in the new reporting portal Fidac will be possible. In addition, FI published the capital requirements of the largest Swedish banks and credit institutions that belong to the supervisory categories 1 and 2 as of the end of the second quarter of 2021. The capital requirements have been published for Handelsbanken, SEB, Swedbank, Landshypotek, Länsförsäkringar, Kommuninvest, Svensk Exportkredit (SEK), SBAB, Skandiabanken, Avanza, Nordnet, and Sparbanken Skåne.
At the end of 2020, new rules were introduced, which change the application of capital requirements going forward. The risk assessments and the accompanying capital requirements and liquidity requirements determined during the Supervisory Review and Evaluation Process (SREP) of FI apply until the new SREP decisions are made under the new regulation. The following capital requirements apply in the second quarter of 2021:
- The capital allocation for Pillar 2 additional own funds requirements for concentration risk, interest rate risk, and additional market risk and pension risk shall comply with the main rule introduced in Chapter 2, section 1a of the Supervision Act.
- For other Pillar 2 additional own fund requirements, the capital allocation in the SREP decisions applies until further notice.
- For three major banks (Handelsbanken, SEB, and Swedbank), the 2% additional requirement for systemic risk in pillar 2 has been removed, other systemically important institutions (O-SII) buffer has been changed to 1%, and systemic risk buffer is 3%.
- As of March 16, 2020, Sweden applies a countercyclical buffer of 0%.
FI also announced that the recommendation regarding restrictions on dividend distribution will not be further extended and will expire on September 30, 2021. Since the uncertainty regarding the Swedish economy due to the pandemic has decreased, it is reasonable to now remove the recommendation. This means that FI will return to the normal supervision procedure for assessing the risks and capital needs of banks. The banks' boards of directors bear responsibility for assessing the capital buffers banks should hold over and above the capital requirements set by FI and propose dividends to their annual general meetings given these capital requirements. Considering a combination of the remaining systemic risks and the economic recovery, FI will raise the countercyclical capital buffer in 2021; this was communicated in the stability report at the beginning of June and is something that the banks must take into account.
Related Links
- Press Release on Reporting by Investment Firms
- Press Release on Capital Requirements for Banks
- Capital Requirements for Banks (PDF)
- Press Release on Dividend Distribution
Keywords: Europe, Sweden, Banking, Investment Firms, IFR, IFD, Reporting, Test Environment, FIDAC, Regulatory Capital, Basel, Pillar 2, SREP, Systemic Risk Buffer, O-SII Buffer, CCyB, Dividend Distribution, FI
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
