Starting from 1 January 2017, selected German banks will for the first time be required to hold more capital in the shape of capital buffers. The intention is for these institutions to become equipped to better absorb potential losses in future.
The decision as to which institutions have to hold such a capital buffer is made in mutual agreement by the Bundesbank and the Federal Financial Supervisory Authority (BaFin), acting as Germany's national supervisors. The basis for the decision is a method, which follows international and national requirements, and whose main features are now being published for the first time. The application of the capital buffers is determined by the BaFin. Accordingly, it publishes the list of affected credit institutions, as well as the level of the capital buffers to be held in future.
The institutions identified are referred to as other systemically important institutions (O-SIIs). Unlike global systemically important institutions (G-SIIs), the main factor in the classification of an O-SII is the potential risk to the national economy.
Institutions in Germany classified as O-SIIs are identified at least annually by the Bundesbank and BaFin in a two-step process. In the first step, the institutions are assessed according to a uniform Europe-wide scoring model. This method, prescribed by the European Banking Authority (EBA), ensures that O-SIIs are identified in a comparable and transparent way in all EUmember states. In the second step, national supervisory authorities can classify additional institutions as O-SIIs, thus taking into account specificities of the respective national banking system.
The key factors in this classification are, in particular, size, economic importance for the European Economic Area (EEA) and Germany, cross-border activity and interconnectedness with the financial system
The provisions of the German Banking Act (Kreditwesengesetz) and theEBA guidelines require publication of the basic features of the method used as well as the institutions affected their scores and the prescribed capital buffers.
Further information
Copyright: Deutsche Bundesbank, Frankfurt am Main, Germany"
page source http://www.bundesbank.de/
