22 December 2020
The European Banking Authority (EBA) proposed today the implementation of an EU-wide floor methodology to calibrate buffer rates of Other Systemically Important Institutions (O-SIIs). The proposed methodology included in the Report aims at strengthening the stability of the banking sector and avoiding the under-calibration of O-SII capital buffer rates, while allowing the relevant authorities to consider national banking sector specificities. The proposed methodology will inform the European Commission’s further legislative initiatives that could shape the introduction of such an EU-wide floor.
With the proposed floor methodology, all EU institutions identified as O-SII will be assigned a non-zero percent buffer rate. National authorities will still retain the ability to set higher O-SII buffer rates than the prescribed floor and are encouraged to do so where deemed appropriate.
At the moment, there is no harmonised methodology at EU level to calibrate O-SII buffer rates. Therefore, the recommendations included in the Report do not bear immediate consequences for the EU banking sector and should be seen as a preparatory step to inform EU co-legislators in view of legislative initiatives to design and operationalise an EU-wide methodology for the calibration of O-SII buffer rates.
The EBA also published a user-friendly data visualisation tool that will allow stakeholders to better understand and navigate the charts, tables and most of the country-level data contributing to the findings and conclusions included in the Report.