NBB has renewed the other systemically important institution (O-SII) designation of eight Belgian banks that were designated as O-SIIs in 2019. For each O-SII, NBB has decided to maintain the capital surcharges announced in 2015. The levels of the capital surcharges are as follows: 1.5% for BNP Paribas Fortis, KBC Group, Belfius Bank, and ING Belgium; 0.75% for Euroclear, The Bank of New York Mellon, Argenta, and Axa Bank Belgium.
These designations are the result of the annual assessment by NBB, based on the EBA identification methodology for systemically important banks. The EBA methodology involves calculation of a score for each bank based on quantitative indicators of size, complexity, interconnectedness, and substitutability. Given that systemically important banks are defined as institutions whose failure would have a significant impact on the financial system or the real economy, additional capital requirements for such institutions have two principal motivations of
- Reducing the probability of default of the institution, given the high economic and social costs of such a default
- Imposing surcharges on the institution that reflect the negative externalities that its failure would generate
Related Link: Press Release
Keywords: Europe, EU, Belgium, Banking, Systemic Risk, O-SII, Regulatory Capital, Basel, NBB
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.