Other Systemically Important Institutions review results in no policy change

The Central Bank of Ireland has today announced the outcome of its 2018 review of Other Systemically Important Institutions (O-SIIs) and associated capital buffers. The O-SII buffer is one of the macro-prudential policy tools used by the Central Bank to promote resilience in the banking sector. Specifically, the objective of the O-SII buffer is to reduce the probability of a systemically important institution’s failure and potential impact of any such failure on the economy.

The outcome of the 2018 review is consistent with the 2017 review. This means there are no policy changes or new requirements for institutions.

• The 2018 review identified six Irish authorised institutions as O-SIIs in line with European Banking Authority (EBA) Guidelines on criteria to assess O-SIIs. The six identified institutions are:
      AIB Group plc
      Bank of Ireland Group plc
      Citibank Holdings Ireland Limited
      Ulster Bank Ireland DAC
      Depfa Bank plc.
      Unicredit Bank Ireland plc.

Institution specific buffers

• Institution-specific O-SII buffers (in the form of additional CET1 capital requirements) have also been reviewed. This has not resulted in changes to the buffers applied. Higher buffer requirements are applied to institutions with a higher degree of systemic importance. The maximum buffer of 2 per cent has not been utilised by the Central Bank. This provides the Central Bank with scope to tighten the O-SII buffer for all institutions, if required.
• Further details of the Review are outlined in today’s announcement.

The Central Bank completes an O-SII review on at least an annual basis to ensure any changes in the financial sector landscape are incorporated into the Central Bank’s O-SII stance.

The UK’s decision to exit the EU will have a substantial impact upon the structure and make-up of the Irish authorised financial system. The effect of these changes will be reflected in future O-SII reviews. At that time, as is the case currently, having an appropriate level of minimum capital requirements to enhance the resilience of the Irish authorised banking system arising from risks related to the systemic importance of individual banks, will determine the Central Bank’s O-SII stance.

Notes

O-SIIs are institutions, which are systemically important to the domestic economy or to the economy of the European Union (EU).

As a member of the Single Supervisory Mechanism (SSM), the supervisory arm of the European Central Bank (ECB), decisions relating to the application of the O-SII buffers are made in conjunction with the ECB and are without prejudice to any powers of the ECB under the SSM Regulations in this respect.

The EBA O-SII Guidelines establish a scoring process for assessing the systemic importance of an institution based on indicators relating to size, importance, complexity and interconnectedness.

O-SII FAQ