The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022. FI notified that several class 2 companies have not reported the correct minimum capital requirements in accordance with the Investment Firms Directive and Regulation (IFD/IFR). FI has requested firms to send information in the required format and updated the lists of deactivated European Banking Authority (EBA) validation rules for periodic reporting, via Fidac, for banks and investment firms. Additionally, FI is evaluating the application of Swedish Financial Benchmark Facility AB (SFBF) to become an authorized administrator, in accordance with the Benchmarks Regulation in European Union. SFBF, which submitted its application in December 2021, provides the benchmark Stockholm Interbank Offered Rate (STIBOR). STIBOR is a critical reference rate according to the Benchmarks Regulation, which specifies that STIBOR may continue to be used while FI evaluates the application. In addition, FI announced its decision to comply with European authorities' guidelines on suitability assessments, internal governance, and sound remuneration policy, with certain exceptions.
FI shall comply with the guidelines, with the following exceptions:
- FI will follow the joint guidelines of EBA and European Securities and Markets Authority (ESMA) for suitability assessments, with the exception of the parts concerning obligations of competent authorities regarding suitability assessments of senior executives. In July 2021, EBA and ESMA revised the joint guidelines on the assessment of the suitability of members of the management body and key function holders. These joint guidelines take into account the recovery and resolution framework introduced by the Bank Recovery and Resolution Directive (BRRD) and provide further guidance in this regard.
- FI specified that provisions related to nomination committees and on independent members of the Board in the EBA guidelines on internal governance are not applicable in Sweden. The EBA guidelines clarify that identifying, managing, and mitigating money laundering and financing of terrorism risk is part of the sound internal governance arrangements and risk management framework of credit institutions. The revised guidelines further specify and reinforce the framework regarding loans to members of the management body and their related parties.
- FI will follow the revised EBA guidelines on sound remuneration policy, with the exception of parts of the guidelines that do not comply with Swedish law. These parts are related to the guidance on risk adjustment and remuneration policy for branches in Sweden of credit institutions in a third country. The possibility for FI to intervene is determined by Swedish law. The guidelines describe in detail how the supervisory authority must intervene if the granting of variable remuneration damages the maintenance of a sound capital base. However, FI clarified that, in Sweden, possibility for FI to intervene is determined by Swedish law. The EBA guidelines stipulate that institutions have to apply sound remuneration policies to all staff and specific requirements for the variable remuneration of staff whose professional activities have a material impact on their risk profile.
Related Links (in English and Swedish)
- Press Release on Capital Adequacy Reporting
- Notification on Validation Rules
- Deactivated Rules for Banks (XLSX)
- Deactivated Rules for Investment Firms (XLSX)
- Notification on SFBF Application
- Notification on Application of Suitability Guidelines
- Notification on Application of Governance Guidelines
- Notification on Application of Remuneration Guidelines
Keywords: Europe, Sweden, Banking, Securities, Investment Firms, Reporting, Regulatory Capital, IFR, Validation Rules, STIBOR, Interest Rate Benchmark, Fidac, Guidelines, Governance, BRRD, Suitability Assessment, Remuneration, Operational Risk, Basel, Benchmarks Regulation, Benchmark Reforms, SFBF, EBA, ESMA, FI
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