Press Releases
Announcement of annual review of macroprudential capital buffers
10 November 2017
Press Release
- 6 banks
identified as being Other Systemically Important Institutions in annual review
- Capital buffers for each institution established
- Buffers are a tool to reduce potential impact of a
systemically important institution’s failure
Read the announcement.
The Central Bank of Ireland today
announces the outcome of the annual review of Other Systemically Important
Institutions (O-SII) in Ireland. The O-SII buffer aims to increase the
resilience of institutions that are systemically important by requiring them to
hold additional capital. The objective of the O-SII buffer is to reduce the potential
impact of a systemically important financial institution’s failure on the
domestic economy.
The framework was first introduced in
December 2015 and is a key element of the Central Bank’s macroprudential
toolkit.
The Central Bank is responsible for
identifying O-SIIs for Ireland and setting buffer rates. As a member of
the Single Supervisory Mechanism (SSM) O-SII buffers are implemented in
conjunction with the European Central Bank (ECB).
The list of O-SIIs and the associated
buffer rates must be reviewed on an annual basis. This announcement is the
outcome of the 2017 annual review process.
Arising
from this review, six institutions have been identified as systemically
important in Ireland and buffer rates have been applied to these institutions.
The review has resulted in two changes to the existing policy stance, namely:
- Permanent
tsb plc has not been identified as an O-SII due to its reduced size1
and;
- The buffer
applied to Citibank Holdings Ireland Limited has been increased to 1 per cent
due to its increased importance.
Otherwise, the institutions identified
as O-SIIs, following the 2016 review, and the associated buffers have not
changed.
2017 O-SII and associated
phased-in buffer requirements
O-SII
|
Level of consolidation
|
O-SII Buffer
|
1 July 2019
|
1 July 2020
|
1 July 2021
|
Allied Irish Banks plc (AIB)
|
Consolidated
|
0.5%
|
1.0%
|
1.5%
|
Bank of Ireland Group plc (BOI)
|
Consolidated
|
0.5%
|
1.0%
|
1.5%
|
Citibank Holdings Ireland Limited (Citigroup)
|
Consolidated
|
0.25%
|
0.5%
|
1.0%
|
Ulster Bank Ireland Designated Activity Company (Ulster)
|
Individual
|
0.25%
|
0.5%
|
0.5%
|
UniCredit
Bank Ireland plc (UniCredit)
|
Individual
|
0.25%
|
0.25%
|
0.25%
|
DePfa
Bank plc (Depfa)
|
Consolidated
|
0.0%
|
0.0%
|
0.0%
|
Formally,
this decision was taken by the Governor following discussion at and advice from
the Macroprudential Measures Committee (MMC). Identification of
O-SIIs followed the European Banking Authority guidelines. The systemic
importance of each institution was assessed based on the criteria of size,
importance to the economy, significance of cross-border activities and
interconnectedness with the financial system. Consideration was also
given to features of each bank’s business model which might influence its
importance to the domestic economy. The applicable buffers were calibrated
based on this assessment.
Notes
- The Central
Bank has been designated under S.I. 158 of 2014 as the national authority
responsible for O-SII identification and associated buffer rate settings.
- As a member of
the Single Supervisory Mechanism (SSM) these decisions are made in
conjunction with the European Central Bank (ECB) and are without prejudice
to any powers of the ECB under the SSM Regulations with respect to O-SII
buffer rate setting.
- O-SII
identifications and rate decisions were first announced in 2015 and have
since been reviewed on an annual basis.
- More
information on the Macroprudential Measures Committee is available here
- The Central
Bank is the designated national macroprudential authority in
Ireland. In recent times, several macroprudential measures have been
activated via the banking system. These include: borrower-based measures
such as mortgage rules; the counter-cyclical capital buffer (CCyB); other
systemically important institution (O-SII) buffer; and reciprocation of
macroprudential policy measures taken by other Member States.
1 As of end-2016 Permanent tsb plc had total assets of
€23.6 billion, a reduction of €5.7 billion compared to end-2015.
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