Under the capital requirements rules in the EU, institutions at Member State level are required to hold countercyclical buffers (CCB) to protect the banking system against potential losses when excess credit growth is associated with an increase in system wide risks. The size of countercyclical buffers will depend on the countercyclical buffer rates set by national authorities and the portfolio distribution of the institutions. In particular, the buffers to be held by individual institutions with cross-border activities will depend on the geographical location of their credit portfolios and not on the location of the institutions that hold these exposures.
The geographical location is to be determined for certain credit risk, trading book and securitisation exposures, as set out in Article 140 of the Capital Requirements Directive (CRD).
The consultation paper outlines the principles behind the identification of the geographical location of these exposures, on the basis of which the institution-specific countercyclical buffer rates shall be determined. In particular, the consultation paper proposes to use the location of the obligor or debtor as a general principle for the identification of the geographical location.
In order to ease the implementation of these standards for banks with limited cross-border activities and trading book activities, proportionality measures have been introduced in order to reduce the operational burden on these institutions.
The deadline for the submission of comments is 1 November, 2013. A public hearing will take place at the EBA premises on 27 September, 2013 from 12.00 to 14.00 hours UK time.
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Consultation
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