FI to Ease Restrictions on Dividend Payments, Increase CCyB
The Swedish Financial Supervisory Authority (FI) has decided not to extend the recommendation on restrictions on dividend payments and share repurchases by banks, as the Swedish economy is in a clear recovery phase. The recommendation expires on September 30, 2021. This means that FI returns to the normal supervisory process for assessing the risks and capital requirements of banks. Additionally, FI has decided to increase the countercyclical capital buffer, or CCyB, value from 0% to 1% from September 29, 2022.
FI had reduced the countercyclical buffer value from 2.5% to 0% in March 2020, due to the economic uncertainty associated with the outbreak of the COVID-19 pandemic. FI has decided to increase the CCyB buffer since the situation continues to improve and the risks of large credit losses at banks have decreased. In addition, the rise in asset prices and housing prices, together with rising household debt, point to increased risks in the financial system, thus indicating a need for capital buffers. An implementation period of 12 months means that the new value will begin to be applied on September 29, 2022. FI aims to gradually increase the buffer value to 2% in 2022 if the economic recovery continues, credit losses are low, and banks can meet the demand for credit. If the risks associated with asset markets and indebtedness remain, FI may subsequently increase the buffer value even further. Additionally, a new decision-making procedure will be introduced from now on for the CCyB, resulting in the repeal of the regulations on countercyclical buffer value and replacing them with special decisions.
Related Links
Keywords: Europe, Finland, Banking, CCyB, Regulatory Capital, Dividend Distribution, Basel, COVID-19, Macro-Prudential Policy, 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
Previous Article
FCA Issues Update on Arrangements for Wind-Down of LIBORRelated Articles
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.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.