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S.I. No. 158/2014 - European Union (Capital Requirements) Regulations 2014

Type Statutory Instrument

Publication 2014-04-04

Last updated 2026-07-14

State Partially repealed superseded text

Text As published

Source Irish Statute Book

articles 162

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

19 amending acts · 2026-07-14, S.I. No. 326/2026 - European Union (Capital Requirements) (Amendment) Regulations 2026

Reform history JSON API

(b) the Bank is responsible for the supervision of a subsidiary of an EU parent institution, an EU parent financial holding company or EU parent mixed-financial holding company,

the Bank shall make all efforts to reach a joint decision with the consolidating supervisor, on the following:

(i) the application of Regulations 60 and 85 to determine the adequacy of the consolidated level of own funds held by the group of institutions with respect to its financial situation and risk profile and the required level of own funds for the application of Regulation 92(2)(a) to each entity within the group of institutions and on a consolidated basis;

(ii) the measures to address any significant matters and material findings relating to liquidity supervision including relating to the adequacy of the organisation and the treatment of risks, as required pursuant to Regulation 74, and relating to the need for institution-specific liquidity requirements in accordance with Regulation 93.

(2) The joint decisions referred to in paragraph (1) shall be reached—

(a) for the purpose of paragraph (1)(i), not later than 4 months after submission by the competent authority, which is responsible for supervision on a consolidated basis, of a report containing the risk assessment of the group of institutions in accordance with Regulations 60, 85 and 92(2)(a) to the other relevant competent authorities, and

(b) for the purpose of paragraph (1)(ii), not later than one month after submission by the competent authority, which is responsible for supervision on a consolidated basis, of a report containing the assessment of the liquidity risk profile of the group of institutions in accordance with Regulations 74 and 93.

(3) The joint decisions referred to in paragraph (1) shall—

(a) duly consider the risk assessment of subsidiaries performed by the competent authorities in accordance with Regulations 60 and 85, and

(b) be set out in documents containing full reasons which shall be provided to the EU parent institution concerned by the consolidating supervisor.

(4) In the event of disagreement with respect to the joint decisions referred to in paragraph (1), the Bank, where it is responsible for supervision on a consolidated basis—

(a) shall, at the request of the competent authorities of another Member State, consult the EBA, or

(b) may consult the EBA on its own initiative.

(5) In the absence of a joint decision between the competent authorities within the time periods referred to in paragraph (2), a decision on the application of Regulations 60, 74, 85, 92(2)(a) and 93 shall be taken on a consolidated basis by the Bank, where it is responsible for supervision on a consolidated basis, after duly considering the risk assessment of subsidiaries performed by the competent authorities.

(6) The decisions referred to in paragraph (5) shall—

(a) be set out in a document containing full reasons, and

(b) take into account the risk assessment, views and reservations of the other competent authorities expressed during the time period referred to in paragraph (2).

(7) A decision referred to in paragraph (5) shall be provided by the Bank to all the competent authorities concerned and to the EU parent institution concerned.

(8) The decision on the application of Regulations 60, 74, 85, 92(2)(a) and 93 shall be taken by the Bank, after duly considering the views and reservations expressed by the consolidating supervisor, on an individual or sub-consolidated basis where the Bank is responsible for the supervision of subsidiaries of—

(a) an EU parent institution,

(b) an EU parent financial holding company, or

(9) The decision referred to in paragraph (8) shall—

(a) be set out in a document containing full reasons, and

(b) take into account the risk assessment, views and reservations of the other competent authorities expressed during the time period referred to in paragraph (2).

(10) Where, at the end of any of the time periods referred to in paragraph (2), any of the competent authorities concerned has referred the matter to the EBA in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank shall defer any joint decision and await any decision that the EBA shall take in accordance with Article 19(3) of that Regulation, and shall take their decision in conformity with the decision of the EBA and the time periods referred to in paragraph (2) shall be deemed the conciliation periods within the meaning of that Regulation.

(11) A matter shall not be referred by the Bank to the EBA after the end of the 4 month period or one-month period referred to in paragraph (2), as applicable, or after a joint decision has been reached.

(12) Without prejudice to paragraph (13), the joint decisions referred to in paragraph (1) and the decisions taken by other competent authorities in their capacities as consolidating supervisors in the absence of a joint decision referred to in Article 113(3) of the Capital Requirements Directive shall be recognised as determinative and applied by the Bank.

(13)(a) The joint decisions referred to in paragraph (1) and decisions taken by the Bank in the absence of a joint decision in accordance with paragraph (5) shall be updated by the Bank on an annual basis.

(b) In exceptional circumstances, where the Bank—

(i) is responsible for supervision on a consolidated basis, it may update a decision on the application of Regulations 92(2)(a) and 93 on the basis of a written and reasoned request from a competent authority responsible for the supervision of subsidiaries of an EU parent institution or an EU parent financial holding company or an EU parent mixed-financial holding company, or

(ii) is responsible for the supervision of one or more subsidiaries of an EU parent institution or an EU parent financial holding company or an EU parent mixed-financial holding company, it may make a written and reasoned request to the competent authority responsible for supervision on a consolidated basis to update a decision on the application of Regulations 92(2)(a) and 93.

(14) In the cases referred to in paragraph (13), the update may be addressed on a bilateral basis between—

(a) the competent authority responsible for consolidated supervision and the Bank, where the Bank makes the request, or

(b) the Bank, where it is responsible for consolidated supervision, and the other competent authority making the request.

Information requirements in emergency situations

102.

(1) Where an emergency situation, including a situation as described in Article 18 of Regulation (EU) No 1093/2010, or a situation of adverse developments in markets arises, which potentially jeopardises the market liquidity and the stability of the financial system of any Member State where entities of a group have been authorised or where significant branches referred to in Regulation 47 are established, the Bank, where it is responsible for supervision on a consolidated basis, shall, subject to—

(a) Articles 53 to 61 of the Capital Requirements Directive,

(b) Regulation 51, and

alert, as soon as is practicable, the EBA and the authorities referred to in Articles 58(4) and 59 of the Capital Requirements Directive and shall communicate all information essential for the pursuance of their tasks.

(2) The obligations referred to in paragraph (1) shall apply to the Bank and, where possible, the Bank and the ESCB central banks shall use existing channels of communication.

(3) The Bank, where it is responsible for supervision on a consolidated basis, shall, where it needs information which has already been given to another competent authority, contact that authority where possible in order to prevent duplication of reporting to the various authorities involved in supervision.

Coordination and cooperation arrangements

103.

(1) In order to facilitate and establish effective supervision, the Bank in its capacity as consolidating supervisor and the other competent authorities shall have written coordination and cooperation arrangements in place.

(2) Under the arrangements referred to in paragraph (1), where the Bank is the consolidating supervisor, additional tasks may be entrusted to the Bank and procedures for the decision-making process and for cooperation with other competent authorities may be specified.

(3) Where—

(a) the Bank is responsible for supervising an institution that is a subsidiary of a parent undertaking, and

(b) the competent authority of another Member State has authorised, and is responsible for supervising, the parent undertaking referred to in subparagraph (a),

the Bank may, in accordance with Article 28 of Regulation (EU) No 1093/2010, enter into an agreement in writing with the authority, referred to in subparagraph (b), under which it delegates to that authority its supervisory responsibility regarding the subsidiary.

(4) On the making of a delegation, referred to in paragraph (3), the competent authority of that other Member State, shall become responsible for supervising the subsidiary in accordance with the Capital Requirements Directive.

(5) Where—

(a) the competent authority of another Member State is responsible for supervising an institution that is a subsidiary of a parent undertaking, and

(b) the Bank has authorised and is responsible for supervising the parent undertaking, referred to in subparagraph (a),

the Bank may, in accordance with Article 28 of Regulation (EU) No 1093/2010, enter into an agreement in writing with that authority, referred to in subparagraph (a), under which the competent authority’s supervisory responsibilities regarding the subsidiary may be delegated to the Bank.

(6) On the making of a delegation, under paragraph (5), the Bank shall become responsible for supervising the subsidiary in accordance with these Regulations.

(7) The Bank shall keep the EBA informed of the existence and content of agreements entered into under this Regulation.

Colleges of supervisors

104.

(1) The Bank, where it is responsible for supervision on a consolidated basis, shall establish colleges of supervisors to facilitate the exercise of the tasks referred to in Regulations 100, 101 and 102(1) and, subject to the confidentiality requirements of paragraph (3) and to European Union law, ensure appropriate coordination and cooperation with relevant third-country supervisory authorities where appropriate.

(2) Where the Bank establishes a college of supervisors, it shall facilitate the college by establishing a framework for—

(a) the Bank, in its role as consolidating supervisor,

(b) the EBA, and

for the purposes of the following:

(i) exchanging information between each other and with the EBA in accordance with Article 21 of Regulation (EU) No 1093/2010;

(ii) agreeing on voluntary entrustment of tasks, and voluntary delegation of responsibilities, where appropriate;

(iii) determining supervisory examination programmes referred to in Article 99 of the Capital Requirements Directive, based on a risk assessment of the group in accordance with Article 97 of that Directive;

(iv) increasing the efficiency of supervision by removing unnecessary duplication of supervisory requirements, including in relation to the information requests referred to in Articles 114 and 117(3) of the Capital Requirements Directive;

(v) consistently applying the prudential requirements under the Capital Requirements Directive, and under the Capital Requirements Regulation, across all entities within a group of institutions without prejudice to the options and discretions available in European Union law;

(vi) applying Article 112(1)(c) of the Capital Requirements Directive, taking into account the work of other forums that may be established in that area.

(3) The Bank, when participating in the colleges of supervisors, shall cooperate closely with the other competent authorities, and the confidentiality requirements under—

(a) Articles 53 to 61 of the Capital Requirements Directive,

(b) Regulation 51, and

shall not prevent the Bank from exchanging confidential information within colleges of supervisors.

(4) The establishment and functioning of colleges of supervisors shall—

(a) not affect the rights and responsibilities of the Bank under these Regulations and under the Capital Requirements Regulation,

(b) be based on written arrangements referred to in Regulation 103, determined after the competent authorities concerned have been consulted by the consolidating supervisor.

(5) The following may participate in a college of supervisors established by the Bank:

(a) competent authorities responsible for the supervision of subsidiaries of the EU parent institution, the EU parent financial holding company or the EU parent mixed-financial holding company concerned;

(b) the competent authority of each host Member State where significant branches, referred to in Regulation 47, are established;

(d) third countries’ competent authorities, where appropriate, and subject to confidentiality requirements that are equivalent, in the opinion of all participating competent authorities in Member States, to the requirements under Articles 53 to 62 of the Capital Requirements Directive and, where applicable, Articles 54 and 58 of Directive 2004/39/EC;

(e) the EBA.

(6) Where the Bank has established a college of supervisors, it shall—

(a) chair the meetings of the college,

(b) decide which competent authorities participate in a meeting or in an activity of the college,

(c) keep all members of the college fully informed, in advance, of the organisation of such meetings, the main issues to be discussed and the activities to be considered, and

(d) keep all the members of the college fully informed, in a timely manner, of the actions taken in those meetings or the measures carried out.

(7) A decision taken by the Bank in its role as a chair of a college of supervisors shall take account of the relevance of the supervisory activity to be planned or coordinated for other competent authorities, and in particular to—

(a) the potential impact on the stability of the financial system in the Member States concerned, as referred to in Regulation 6, and

(b) the obligations referred to in Regulations 47(9) and 48(5) to (9).

(8) Where the Bank is the chair of a college of supervisors, it shall, subject to the confidentiality requirements of—

(a) Articles 53 to 61 of the Capital Requirements Directive,

(b) Regulation 51, and

inform the EBA of the activities of the college, including in emergency situations, and shall communicate to the EBA all information that is of particular relevance for the purposes of supervisory convergence.

(9) In this Regulation, “college of supervisors” means a college of supervisors established by the Bank under paragraph (1).

Cooperation obligations

105.

(1) The Bank shall cooperate closely with the competent authorities of the other Member States.

(2) Without limiting the generality of paragraph (1), the Bank shall provide other competent authorities with any information which is essential or relevant for the exercise of those other authorities’ supervisory tasks under the Capital Requirements Directive and the Capital Requirements Regulation and, in performing that function, the Bank shall—

(a) communicate, on request, all relevant information, and

(b) communicate, on its own initiative, all essential information.

(3) Information referred to in paragraph (2) shall be regarded as essential if it could materially influence the assessment of the financial soundness of an institution, or financial institution, in another Member State.

(4) Without limiting the generality of paragraph (3), the essential information referred to in paragraph (2) shall include, in particular, the following items:

(a) identification of institutions’ group legal structure and governance structure including organisational structure, covering all regulated entities, non-regulated entities, non-regulated subsidiaries and significant branches belonging to the group, the parent undertakings, in accordance with–

(i) Regulations 61(1) and 97(2) and (3),

(ii) section 9G(7) of the Act of 1971, or

(iii) section 17D(7) of the Act of 1989,

and of the competent authorities of the regulated entities in the group;

(b) procedures for the collection of information from the institutions in a group, and the checking of that information;

(d) significant penalties and exceptional measures taken by competent authorities in accordance with these Regulations, including—

(i) the imposition of a specific own fund requirement under Regulation 92, and

(ii) the imposition of any limitation on the use of the Advanced Measurement Approach for the calculation of the own funds requirements, under Article 312(2) of the Capital Requirements Regulation.

(5) The Bank shall cooperate with the EBA for the purposes of these Regulations and the Capital Requirements Regulation, in accordance with Regulation (EU) No 1093/2010.

(6) Without prejudice to the generality of paragraph (5) the Bank shall provide the EBA with such information as is necessary for the EBA to carry out its duties under—

(a) the Capital Requirements Directive,

(b) the Capital Requirements Regulation, and

in accordance with Article 35 of Regulation (EU) No 1093/2010.

(7) In particular, where the Bank is the consolidating supervisor of EU parent institutions and institutions controlled by EU parent financial holding companies or EU parent mixed-financial holding companies, it shall provide the competent authorities in other Member States, who supervise subsidiaries of those parent undertakings, with all relevant information, and in determining the extent of relevant information, the importance of those subsidiaries within the financial system in those Member States shall be taken into account.

(8) The Bank may refer to the EBA any of the following situations:

(a) where the competent authority of another Member State has not communicated essential information;

(b) where a request for cooperation, in particular to exchange relevant information, has been rejected or has not been acted upon within a reasonable time.

(9) Where the Bank is responsible for the supervision of an institution controlled by an EU parent institution, it shall, whenever possible, contact the consolidating supervisor when it needs information regarding the implementation of approaches and methodologies set out in these Regulations or in the Capital Requirements Regulation that may already be available to the consolidating supervisor.

(10) Before making a decision relating to an item that is of importance for another competent authoritys supervisory tasks, the Bank shall consult that other authority with regard to the following items:

(a) changes in the shareholder, organisational or management structure of credit institutions in a group, which require the approval or authorisation of competent authorities;

(b) significant penalties or exceptional measures taken by competent authorities, including the imposition of a specific own funds requirement under Regulation 92 and the imposition of any limitation on the use of the advanced measurement approaches for the calculation of the own funds requirements under Article 312(2) of the Capital Requirements Regulation.

(11) For the purposes of paragraph (10)(b), the consolidating supervisor shall always be consulted.

(12) Without prejudice to the obligations of the Bank under this Regulation, the Bank may decide not to consult other competent authorities in cases of urgency or where such consultation could jeopardise the effectiveness of its decision and, in such cases, the Bank shall, without delay, inform the other competent authorities after taking its decision.

Checking information concerning entities in other Member States

106.

(1) Where, in applying these Regulations and the Capital Requirements Regulation, the Bank wishes in specific cases to verify the information concerning—

(a) an institution,

(b) a financial holding company,

(d) a financial institution,

(e) an ancillary services undertaking,

(f) a mixed-activity holding company,

(g) a subsidiary as referred to in Regulation 107(3), or

(h) a subsidiary as referred to in Regulation 113,

situated in another Member State, it shall request the competent authorities of that other Member State to have that verification carried out.

(2) Where the Bank receives a request from a competent authority in another Member State to verify information relating to a relevant entity that is located in the State, it shall, within the framework of its competence, act upon it either—

(a) by carrying out,

(b) by allowing the authorities who made the request to carry out, or

the verification.

(3) A competent authority of another Member State that has made a request to the Bank for the verification of information under paragraph (2) is entitled to participate in the verification where that competent authority does not undertake the verification itself.

(4) Where the Bank has made a request to the competent authority of another Member State for the verification of information, referred to in paragraph (1), it is entitled to participate in the verification, if it so wishes, in accordance with Article 118 of the Capital Requirements Directive.

(5) In this Regulation, “relevant entity” means an entity referred to in subparagraphs (a) to (h) in paragraph (1).

Financial holding companies, mixed-financial holding companies and mixed-activity holding companies

Inclusion of holding companies in consolidated supervision

107.

(1) Where appropriate, the Bank shall adopt such measures as are necessary to include financial holding companies and mixed-financial holding companies in consolidated supervision.

(2) Where a subsidiary that is an institution is not included in supervision on a consolidated basis under one of the cases provided for in Article 19 of the Capital Requirements Regulation, the parent undertaking of the institution shall, on being requested by the Bank to do so, provide the Bank with such information as it requires to facilitate its supervision of that subsidiary.

(3) The Bank may, for the purpose of exercising supervision on a consolidated basis, ask a subsidiary of—

(a) an institution,

(b) a financial holding company, or

which is not included within the scope for supervision on a consolidated basis for the information referred to in Regulation 110, and the procedures for transmitting and checking the information set out in that Regulation shall apply.

Supervision of mixed-financial holding companies

108.

(1) Where a mixed-financial holding company is subject to equivalent provisions under these Regulations and under Directive 2002/87/EC, in particular in terms of risk-based supervision, the Bank, where it is responsible for exercising supervision on a consolidated basis, may after consulting the other competent authorities responsible for the supervision of subsidiaries, apply only Directive 2002/87/EC to that mixed-financial holding company.

(2) Where a mixed-financial holding company is subject to equivalent provisions under these Regulations and under Directive 2009/138/EC, in particular in terms of risk-based supervision, the Bank, where it is responsible for exercising supervision on a consolidated basis, may, in agreement with the group supervisor in the insurance sector, apply to that mixed-financial holding company only the provisions of these Regulations relating to the most significant financial sector as defined in Article 3(2) of Directive 2002/87/EC.

(3) The Bank, where responsible for consolidated supervision, shall inform the EBA and the European Insurance and Occupational Pensions Authority of the decisions taken under paragraphs (1) and (2).

Qualification of directors

109.

A financial holding company or a mixed-financial holding company shall ensure that the members of its management body are of sufficiently good repute and possess sufficient knowledge, skills and experience, referred to in Regulation 79(1), to perform their duties, taking into account the specific role of a financial holding company or mixed-financial holding company.

Requests for information and inspections

110.

(1) Where the parent undertaking of one or more institutions is a mixed-activity holding company, the Bank, where it is responsible for the authorisation and supervision of those institutions, shall, by approaching the mixed-activity holding company and its subsidiaries either directly or via subsidiaries that are institutions, require them to supply any information which would be relevant for the purpose of supervising those subsidiaries.

(2) Subject to paragraphs (3) and (4), the Bank may carry out, or have carried out by external inspectors, on-the-spot inspections to check information received from mixed-activity holding companies and their subsidiaries.

(3) Where a mixed-activity holding company or one of its subsidiaries is an insurance undertaking, the procedure set out in Regulation 113 may also be used in addition to the inspections mentioned in paragraph (2).

(4) Where a mixed-activity holding company or one of its subsidiaries is situated in a Member State (other than the State) other than that in which a subsidiary that is an institution is situated, an on-the-spot check of information shall be carried out in accordance with the procedure set out in Regulation 106.

Supervision

111.

(1) Without prejudice to Part Four of the Capital Requirements Regulation, where—

(a) the parent undertaking of one or more institutions is a mixed-activity holding company, and

(b) the Bank is responsible for the supervision of one or more of those institutions,

the Bank shall exercise general supervision over transactions between the institution and the mixed-activity holding company and its subsidiaries.

(2) Each institution supervised by the Bank shall—

(a) have in place adequate risk management processes and internal control mechanisms, including sound reporting and accounting procedures in order to identify, measure, monitor and control transactions with their parent mixed-activity holding company and its subsidiaries, as appropriate, and

(b) report to the Bank any significant transaction with entities other than the entity referred to in Article 394 of the Capital Requirements Regulation.

(3) The procedures and significant transactions referred to in paragraph (2) shall be subject to overview by the Bank.

Exchange of information

112.

(1) Nothing in these Regulations shall prevent the exchange of information which would be relevant for the purposes of supervision in accordance with section 9D of the Act of 1971 and Regulations 99 to 114 between the following:

(a) undertakings included in supervision on a consolidated basis;

(b) mixed-activity holding companies and their subsidiaries;

(2) Where a parent undertaking and any of its subsidiaries that are institutions are located in different Member States, one of which is the State, the Bank shall communicate to the other competent authorities concerned all relevant information in its possession that could facilitate the exercise of supervision of those entities on a consolidated basis.

(3) Where a parent undertaking is located in the State, and the Bank is not itself responsible for exercising supervision on a consolidated basis pursuant to Regulation 99, the Bank shall, on being requested to do so by the competent authority responsible for supervision on a consolidated basis, take all reasonable steps to—

(a) obtain from the parent undertaking information that is relevant to exercising that supervision, and

(b) transmit to that other authority any information so obtained.

(4) The communication or exchange by the Bank of information referred to in paragraph (2) does not, in relation to the collection or possession of information about financial holding companies, mixed-financial holding companies, financial institutions or ancillary services undertakings, imply that the Bank is required to perform a supervisory role in relation to those institutions or undertakings standing alone.

(5) The communication or exchange by the Bank of information referred to in Regulation 110 in relation to a mixed-activity holding company and those of its subsidiaries which are not credit institutions, or to subsidiaries referred to in Regulation 107(3), does not in any way imply that the Bank performs a supervisory role in relation to that company or to those of its subsidiaries which are not credit institutions, or to subsidiaries as referred to in Regulation 107(3).

Cooperation

113.

(1) Where—

(a) an institution authorised in the State, or a financial holding company, mixed-financial holding company or a mixed-activity holding company, established in the State, controls one or more subsidiaries which are insurance companies or other undertakings providing investment services, and

(b) those insurance companies or other undertakings are subject to authorisation by the competent authorities in other Member States,

the Bank shall make every effort to co-operate closely with the competent authorities entrusted with the public task of supervising such insurance companies or undertakings that provide investment services.

(2) Without prejudice to its other responsibilities, the Bank shall provide the competent authorities of other Member States with any information that is likely to simplify their task and to allow supervision of the activities and the overall financial situation of the undertakings they supervise.

(3) Information received, within the framework of supervision on a consolidated basis, and in particular any exchange of information between competent authorities which is provided for in these Regulations, shall be subject to professional secrecy requirements at least equivalent to—

(a) those referred to in Article 53(1) of the Capital Requirements Directive for credit institutions, or

(b) under Directive 2004/39/EC.

(4) Where the Bank is responsible for supervision on a consolidated basis, it shall establish lists of the financial holding companies or mixed-financial holding companies referred to in Article 11 of the Capital Requirements Regulation and communicate those lists to—

(a) the competent authorities of the other Member States,

(b) the EBA, and

Assessment of equivalence of third countries’ consolidated supervision

114.

(1) Where an institution, the parent undertaking of which is an institution, a financial holding company or a mixed-financial holding company, the head office of which is in a third country, is not subject to supervision on a consolidated basis under Article 111 of the Capital Requirements Directive, the Bank shall assess in accordance with paragraph (2) whether the institution is subject to consolidated supervision by a third-country supervisory authority which is equivalent to that governed by—

(a) the principles set out in these Regulations, and

(b) the requirements of Part One, Title II, Chapter 2 of the Capital Requirements Regulation.

(2) The assessment, referred to in paragraph (1) shall be carried out by the Bank in instances where it would be responsible for consolidated supervision if paragraph (4) were to apply, at the request of—

(a) the parent undertaking,

(b) any of the regulated entities authorised in the Union, or

and the Bank shall consult the other competent authorities involved.

(3) The Bank, when carrying out the assessment referred to in paragraph (1)—

(a) shall take into account any guidance issued by the European Banking Committee pursuant to Article 127(2) of the Capital Requirements Directive, and

(b) shall consult the EBA,

before adopting a decision.

(4) In the absence of supervision equivalent to that referred to in this Regulation and the requirements of Part One, Title II, Chapter 2 of the Capital Requirements Regulation, the Bank shall apply these Regulations and the Capital Requirements Regulation to an institution, making any necessary changes which achieve the objectives of supervision on a consolidated basis of institutions.

(5) The supervisory techniques referred to in paragraph (4) shall, after consulting the other competent authorities involved, be agreed upon by the Bank where it is responsible for consolidated supervision.

(6) The Bank, when carrying out its functions under this Regulation, may in particular require the establishment of a financial holding company or mixed-financial holding company which has its head office in the Union, and apply the provisions of these Regulations on consolidated supervision to the consolidated position of that financial holding company or the consolidated position of the institutions of that mixed-financial holding company.

(7) The supervisory techniques referred to in this Regulation shall be designed to achieve the objectives of supervision on a consolidated basis as set out in this Chapter, and shall be notified to—

(a) the other competent authorities involved,

(b) the EBA, and

(8) In this Regulation, “European Banking Committee” means the committee established pursuant to Commission Decision 2004/10/EC²² .

Chapter 4 Capital Buffers

Buffers

Definitions

115.

For the purpose of this Chapter the following definitions shall apply:

(a)“capital conservation buffer” means the own funds that an institution is required to maintain in accordance with Regulation 117;

(b)“institution-specific countercyclical capital buffer” means the own funds that an institution is required to maintain in accordance with Regulation 118;

(c)“G-SII buffer” means the own funds that are required to be maintained in accordance with Regulation 123(1);

(d)“O-SII buffer” means the own funds that may be required to be maintained in accordance with Regulation 123(2);

(e)“relevant third-country authority” has the meaning assigned to it in Regulation 127(1);

(f)“systemic risk buffer” means the own funds that an institution is or may be required to maintain in accordance with Article 133 of the Capital Requirements Directive;

(g)“combined buffer requirement” means the total Common Equity Tier 1 capital required to meet the requirement for the capital conservation buffer extended by the following, as applicable:

(i) an institution-specific countercyclical capital buffer;

(ii) a G-SII buffer;

(iii) an O-SII buffer;

(iv) a systemic risk buffer;

(h)“countercyclical buffer rate” means the rate that institutions must apply in order to calculate their institution-specific countercyclical capital buffer, and that is set in accordance with Regulations 125 to 128;

(i)“domestically authorised institution” means an institution that has been authorised in the State;

(j)“buffer guide” means a benchmark buffer rate calculated in accordance with Article 135(1) of the Capital Requirements Directive.

Non-application of Chapter to certain investment firms

116.

This Chapter does not apply to investment firms that are not authorised to provide the investment services listed in points 3 and 6 of Section A of Annex I to Directive 2004/39/EC.

Requirement to maintain a capital conservation buffer

117.

(1) Subject to Regulation 119, institutions shall maintain, in addition to the Common Equity Tier 1 capital maintained to meet the own funds requirement imposed by Article 92 of the Capital Requirements Regulation, a capital conservation buffer of Common Equity Tier 1 capital equal to 2.5 per cent of their total risk exposure amount calculated in accordance with Article 92(3) of that Regulation on an individual and consolidated basis, as applicable in accordance with Part One, Title II of that Regulation.

(2) Institutions shall not use Common Equity Tier 1 capital that is maintained in accordance with paragraph (1) to meet any requirements imposed under Regulation 92.

(3) Where an institution fails to meet the requirement under paragraph (1), it shall be subject to the restrictions on distributions set out in Regulation 129(3) and (4).

Requirement to maintain institution-specific countercyclical capital buffer

118.

(1) Subject to Regulation 119, institutions shall maintain an institution-specific countercyclical capital buffer equivalent to their total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation multiplied by the weighted average of the countercyclical buffer rates calculated in accordance with Regulations 125 to 128 on an individual and consolidated basis, as applicable in accordance with Part One, Title II of that Regulation.

(2) Institutions shall meet the requirement imposed by paragraph (1) with Common Equity Tier 1 capital, which shall be additional to any Common Equity Tier 1 capital maintained to meet—

(a) the own funds requirement imposed by Article 92 of the Capital Requirements Regulation,

(b) the requirement to maintain a capital conservation buffer under Regulation 117, and

(3) An institution that fails to meet the requirement imposed by paragraph (1) shall be subject to the restrictions on distributions set out in Regulation 129(3) and (4).

Transitional provisions for capital buffers

119.

(1) For the period from 1 January 2016 until 31 December 2016—

(a) the capital conservation buffer shall consist of Common Equity Tier 1 capital equal to 0.625 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation, and

(b) the institution-specific countercyclical capital buffer shall be no more than 0.625 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation.

(2) For the period from 1 January 2017 until 31 December 2017—

(a) the capital conservation buffer shall consist of Common Equity Tier 1 capital equal to 1.25 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation, and

(b) the institution-specific countercyclical capital buffer shall be no more than 1.25 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation.

(3) For the period from 1 January 2018 until 31 December 2018—

(a) the capital conservation buffer shall consist of Common Equity Tier 1 capital equal to 1.875 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation, and

(b) the institution-specific countercyclical capital buffer shall be no more than 1.875 per cent of the total of the risk-weighted exposure amounts of an institution calculated in accordance with Article 92(3) of the Capital Requirements Regulation.

(4) The requirement for a capital conservation plan and the restrictions on distributions referred to in Regulations 129 and 130 shall apply during the transitional period between 1 January 2016 and 31 December 2018 where institutions fail to meet the combined buffer requirement taking into account the requirements set out in paragraphs (1), (2) and (3).

Derogation from requirement to maintain certain buffers

120.

(1) The Bank is designated as the authority in charge of the application of Regulations 117 and 118 and may exempt small and medium-sized investment firms from the requirements set out in those Regulations if such an exemption does not threaten the stability of the financial system of the State.

(2) A decision on the application of an exemption referred to in paragraph (1) shall—

(a) be reasoned,

(b) include an explanation why the exemption does not threaten the stability of the financial system of the State, and

(3) Where it applies an exemption under paragraph (1), the Bank shall notify the Commission, the ESRB, the EBA and the competent authorities of any other Member States concerned.

(4) For the purposes of this Regulation, investment firms shall be categorised as small or medium-sized in accordance with Commission Recommendation 2003/361/EC of 6 May 2003²³ .

Global and other systemically important institutions

121.

(1) The Bank is designated for the purposes of Article 131(1) of the Capital Requirements Directive as the authority in charge of identifying, on a consolidated basis, global systemically important institutions (in these Regulations referred to as “G-SIIs”), and, on an individual, sub-consolidated or consolidated basis, as applicable, other systemically important institutions (in these Regulations referred to as “O-SIIs”), which have been authorised within the State.

(2) For the purposes of paragraph (1)—

(a) G-SIIs shall be an EU parent institution, an EU parent financial holding company, an EU parent mixed-financial holding company or an institution,

(b) G-SIIs shall not be an institution that is a subsidiary of an EU parent institution, of an EU parent financial holding company or of an EU parent mixed-financial holding company,

(c) O-SIIs can either be an EU parent institution, an EU parent financial holding company, an EU parent mixed-financial holding company or an institution,

(d) the identification methodology for G-SIIs shall be based on the following categories:

(i) size of the group;

(ii) interconnectedness of the group with the financial system;

(iii) substitutability of the services or of the financial infrastructure provided by the group;

(iv) complexity of the group;

(v) cross-border activity of the group, including cross-border activity between Member States and between a Member State and a third country,

(e) each category, referred to in subparagraph (d), shall receive an equal weighting and shall consist of quantifiable indicators, and

(f) the methodology, referred to in subparagraph (d), shall produce an overall score for each entity referred to in this Regulation that is assessed, which allows G-SIIs to be identified and allocated into a sub-category as described in Regulation 123(6).

Identification of O-SIIs

122.

For the purposes of Regulation 121(1)—

(a) O-SIIs shall be identified in accordance with that paragraph,

(b) systemic importance shall be assessed on the basis of at least one of the following criteria:

(i) size;

(ii) importance for the economy of the Union or of the State;

(iii) significance of cross-border activities;

(iv) interconnectedness of the institution or group with the financial system.

G-SII and O-SII buffers

123.

(1) Each G-SII shall, on a consolidated basis, maintain a G-SII buffer which shall correspond to the sub-category to which the G-SII is allocated in accordance with paragraphs (6) and (7). That buffer shall consist of and shall be supplementary to Common Equity Tier 1 capital.

(2) The Bank may require each O-SII, on a consolidated or sub-consolidated or individual basis, as applicable, to maintain an O-SII buffer of up to 2 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation, taking into account the criteria for the identification of the O-SII. That buffer shall consist of and shall be supplementary to Common Equity Tier 1 capital.

(3) When requiring an O-SII buffer to be maintained, the Bank shall comply with the following:

(a) the O-SII buffer must not entail disproportionate adverse effects on the whole or parts of the financial system of other Member States, or of the European Union as a whole, forming or creating an obstacle to the functioning of the internal market;

(b) the O-SII buffer shall be reviewed by the Bank at least annually.

(4) Before setting or resetting an O-SII buffer, the Bank shall, not later than one month before the publication of the decision referred to in paragraph (2), notify the Commission, the ESRB, the EBA, and the competent and designated authorities of the other Member States concerned, and such notification shall include details of—

(a) the grounds on which the O-SII buffer is considered likely to be effective and proportionate to mitigate the risk,

(b) based on information which is available to the Bank, an assessment of the likely positive or negative impact of the O-SII buffer on the internal market, and

(5) Without prejudice to Article 133 of the Capital Requirements Directive and paragraph (2), where an O-SII is a subsidiary of either a G-SII or an O-SII which is an EU parent institution and subject to an O-SII buffer on a consolidated basis, the buffer that applies at individual or sub-consolidated level for the O-SII shall not exceed the higher of the following:

(a)1 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation;

(b) the G-SII or O-SII buffer rate applicable to the group at consolidated level.

(6)(a) There shall be at least 5 subcategories of G-SIIs.

(b) The lowest boundary and the boundaries between each subcategory shall be determined by the scores under the identification methodology.

(c) The cut-off scores between adjacent sub-categories shall be defined clearly and shall adhere to the principle that there is a constant linear increase of systemic significance, between each sub-category resulting in a linear increase in the requirement of additional Common Equity Tier 1 capital, with the exception of the highest sub-category.

(d) For the purposes of this paragraph, systemic significance is the expected impact exerted by the G-SII’s distress on the global financial market.

(e) The lowest sub-category shall be assigned a G-SII buffer of 1 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation and the buffer assigned to each sub-category shall increase in gradients of 0.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation up to and including the fourth sub-category.

(f) The highest sub-category of the G-SII buffer shall be subject to a buffer of 3.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation.

(7) Without prejudice to Regulation 121(2)(a) to (c) and paragraph (6), the Bank may, in the exercise of sound supervisory judgment—

(a) re-allocate a G-SII from a lower sub-category to a higher sub-category, or

(b) allocate an entity referred to in Regulation 121(2) that has an overall score that is lower than the cut-off score of the lowest sub-category, to that sub-category or to a higher sub-category, thereby designating it as a G-SII.

(8) Where the Bank takes a decision in accordance with paragraph (7)(b), it shall notify the EBA accordingly, providing reasons.

(9) The Bank shall—

(a) notify the names of the G-SIIs and O-SIIs and the respective sub-category to which each G-SII is allocated, to the Commission, the ESRB and the EBA,

(b) disclose the names of the G-SIIs and O-SIIs and the sub-category to which each G-SII is allocated to the public,

(c) review annually the identification of G-SIIs and O-SIIs and the G-SII allocation into the respective sub-categories and report the result to the systemically important institution concerned, the Commission, the ESRB and the EBA, and

(d) disclose the updated list of identified systemically important institutions, and the sub-category into which each identified G-SII is allocated, to the public.

(10) Systemically important institutions shall not use Common Equity Tier 1 capital that is maintained to meet the requirements under paragraphs (1) and (2) to meet any requirements imposed under—

(a) Article 92 of the Capital Requirements Regulation,

(b) Regulations 90 and 92, and

(11)(a) Where a group, on a consolidated basis, is subject to the following, the higher buffer shall apply in each case:

(i) a G-SII buffer and an O-SII buffer;

(ii) a G-SII buffer, an O-SII buffer and a systemic risk buffer in accordance with Article 133 of the Capital Requirements Directive.

(b) Where an institution, on an individual or sub-consolidated basis, is subject to an O-SII buffer and a systemic risk buffer in accordance with Article 133 of the Capital Requirements Directive, the higher of the 2 shall apply.

(12) Notwithstanding paragraph (11), where the systemic risk buffer set by the Bank in accordance with Article 133 of the Capital Requirements Directive applies to all exposures located in the State to address the macroprudential risk in the State, but does not apply to exposures outside the State, that systemic risk buffer shall be cumulative with the O-SII or G-SII buffer that is applied in accordance with this Regulation.

(13) Where paragraph (11) applies and an institution is part of a group or a sub-group to which a G-SII or an O-SII belongs, this shall not imply that that institution is, on an individual basis, subject to a combined buffer requirement that is lower than the sum of—

(a) the capital conservation buffer,

(b) the countercyclical capital buffer, and

(14) Where paragraph (12) applies and an institution is part of a group or a sub-group to which a G-SII or an O-SII belongs, this shall not imply that that institution is, on an individual basis, subject to a combined buffer requirement that is lower than the sum of—

(a) the capital conservation buffer,

(b) the countercyclical capital buffer, and

(15) From 1 January 2016, paragraph (1) shall apply in the following manner:

(a)25 per cent of the G-SII buffer, set in accordance with that paragraph, in 2016;

(b)50 per cent of the G-SII buffer, set in accordance with that paragraph, in 2017;

(d)100 per cent of the G-SII buffer, set in accordance with that paragraph, in 2019.

Recognition of systemic risk buffer rate

124.

(1) The Bank may recognise a systemic risk buffer rate set by another Member State in accordance with Article 133 of the Capital Requirements Directive and may apply that buffer rate to domestically-authorised institutions for the exposures located in the Member State that sets that buffer rate.

(2) Where the Bank recognises a systemic risk buffer rate referred to in paragraph (1) for domestically-authorised institutions they shall notify the Commission, the ESRB, the EBA and the Member State that sets that systemic risk buffer rate.

(3) When deciding whether to recognise a systemic risk buffer rate, the Bank shall take into consideration the information presented by the Member State that sets that buffer rate in accordance with Article 133(11), (12) or (13) of the Capital Requirements Directive.

Setting and calculating countercyclical capital buffers

Setting countercyclical buffer rates

125.

(1) The Bank is designated as the authority that is responsible for setting the countercyclical buffer rate for the State.

(2)(a) The Bank shall calculate, for every quarter, a buffer guide as a reference to guide its exercise of judgment in setting the countercyclical buffer rate in accordance with paragraph (3).

(b) The buffer guide shall reflect, in a meaningful way, the credit cycle and the risks due to excess credit growth in the State and shall duly take into account specificities of the national economy.

(c) The buffer guide shall be based on the deviation of the ratio of credit-to-GDP from its long-term trend, taking into account, amongst other things—

(i) an indicator of growth of levels of credit within the State and, in particular, an indicator reflective of the changes in the ratio of credit granted in the State to GDP, and

(ii) any current guidance maintained by the ESRB in accordance with Article 135(1)(b) of the Capital Requirements Directive.

(3) The Bank shall assess and set the appropriate countercyclical buffer rate for the State on a quarterly basis, and in so doing shall take into account—

(a) the buffer guide calculated in accordance with paragraph (2),

(b) any current guidance maintained by the ESRB in accordance with Article 135(1)(a), (c) and (d) of the Capital Requirements Directive and any recommendations issued by the ESRB on the setting of a buffer rate, and

(4)(a) The countercyclical buffer rate, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation of institutions that have credit exposures in the State, shall be between 0 and 2.5 per cent, calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points.

(b) Where justified on the basis of the considerations set out in paragraph (3), the Bank may set a countercyclical buffer rate in excess of 2.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation.

(5)(a) Where the Bank sets the countercyclical buffer rate above zero for the first time, or where, thereafter, the Bank increases the prevailing countercyclical buffer rate setting, it shall also decide the date from which the institutions shall apply that increased buffer for the purposes of calculating their institution-specific countercyclical capital buffer.

(b) The date, referred to in subparagraph (a), shall be no later than 12 months after the date when the increased buffer setting is announced in accordance with paragraph (7).

(c) Where the date, referred to in subparagraph (a), is less than 12 months after the increased buffer setting is announced in accordance with paragraph (7), that shorter deadline for application shall be justified on the basis of exceptional circumstances.

(6)(a) Subject to subparagraph (b), where the Bank reduces the existing countercyclical buffer rate, whether or not it is reduced to zero, it shall also decide an indicative period during which no increase in the buffer is expected.

(b) The indicative period, referred to in subparagraph (a), shall not bind the Bank.

(7) The Bank shall—

(a) announce the quarterly setting of the countercyclical buffer rate by publication on its website, including at least the following information:

(i) the applicable countercyclical buffer rate;

(ii) the relevant credit-to-GDP-ratio and its deviation from the long-term trend;

(iii) the buffer guide calculated in accordance with paragraph (2);

(iv) a justification for that buffer rate;

(v) where the buffer rate is increased, the date from which the institutions shall apply that increased buffer rate for the purposes of calculating their institution-specific countercyclical capital buffer;

(vi) where the date referred to in clause (v) is less than 12 months after the date of the announcement under this paragraph, a reference to the exceptional circumstances that justify that shorter deadline for application;

(vii) where the buffer rate is decreased, the indicative period during which no increase in the buffer rate is expected, together with a justification for that period,

(b) take all reasonable steps to coordinate the timing of that announcement with designated authorities in other Member States, and

(c) notify each quarterly setting of the countercyclical buffer rate and the information specified in subparagraphs (a)(i) to (vii) to the ESRB.

Recognition of countercyclical buffer rates in excess of 2.5 per cent

126.

(1) Where a designated authority in another Member State in accordance with Article 136(4) of the Capital Requirements Directive, or a relevant third-country authority, has set a countercyclical buffer rate in excess of 2.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation, the Bank may recognise that buffer rate for the purposes of the calculation by domestically-authorised institutions of their institution-specific countercyclical capital buffers.

(2) Where the Bank, in accordance with paragraph (1), recognises a buffer rate in excess of 2.5 per cent of the total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation, it shall announce that recognition by publication on its website, including at least the following information:

(a) the applicable countercyclical buffer rate;

(b) the Member State or third countries to which it applies;

(c) where the buffer rate is increased, the date from which the institutions authorised in the State shall apply that increased buffer rate for the purposes of calculating their institution-specific countercyclical capital buffer;

(d) where the date, referred to in subparagraph (c), is less than 12 months after the date of the announcement under this paragraph, a reference to the exceptional circumstances that justify that shorter deadline for application.

Decision by Bank on third-country countercyclical buffer rates

127.

(1) Where a countercyclical buffer rate has not been set and published by the relevant third-country authority for a third country (in this Chapter referred to as a “relevant third-country authority”) to which one or more Union institutions have credit exposures the Bank may set the countercyclical buffer rate that domestically-authorised institutions shall apply for the purposes of the calculation of their institution-specific countercyclical capital buffer.

(2) Where a countercyclical buffer rate has been set and published by the relevant third-country authority for a third country, the Bank may set a different buffer rate for that third country for the purposes of the calculation by domestically-authorised institutions of their institution-specific countercyclical capital buffer if they reasonably consider that the buffer rate set by the relevant third-country authority is not sufficient to protect those institutions appropriately from the risks of excessive credit growth in that country.

(3) When exercising the power under paragraph (2), the Bank shall not set a countercyclical buffer rate below the level set by the relevant third-country authority unless that buffer rate exceeds 2.5 per cent, expressed as a percentage of the total risk exposure amount, calculated in accordance with Article 92(3) of the Capital Requirements Regulation, of institutions that have credit exposures in that third country.

(4)(a) Where the Bank sets a countercyclical buffer rate for a third country, pursuant to paragraph (1) or (2), which increases the existing applicable countercyclical buffer rate, the Bank shall specify the date from which domestically-authorised institutions shall apply that buffer rate for the purposes of calculating their institution-specific countercyclical capital buffer.

(b) The date, referred to in subparagraph (a), shall be no later than 12 months from the date on which the buffer rate is announced in accordance with paragraph (5).

(c) Where the date, referred to in subparagraph (a), is less than 12 months after the setting is announced, that shorter deadline for application shall be justified on the basis of exceptional circumstances.

(5) The Bank shall publish any setting of a countercyclical buffer rate for a third country, pursuant to paragraph (1) or (2), on its website, and shall include the following information:

(a) the countercyclical buffer rate and the third country to which it applies;

(b) a justification for that buffer rate;

(c) where the buffer rate is set above zero for the first time or is increased, the date from which the institutions shall apply that increased buffer rate for the purposes of calculating their institution-specific countercyclical capital buffer;

(d) where the date referred to in subparagraph (c) is less than 12 months after the date of the publication of the setting under this paragraph, a reference to the exceptional circumstances that justify that shorter deadline for application.

Calculation of institution-specific countercyclical capital buffer rates

128.

(1) The institution-specific countercyclical capital buffer rate shall consist of the weighted average of the countercyclical buffer rates that apply in the jurisdictions where the relevant credit exposures of the institution are located or are applied for the purposes of this Regulation by virtue of Regulation 127(1) or (2).

(2) Institutions shall, in order to calculate the weighted average referred to in paragraph (1), apply to each applicable countercyclical buffer rate its total own funds requirements for credit risk, determined in accordance with Part Three, Titles II and IV of the Capital Requirements Regulation, that relates to the relevant credit exposures in the territory in question, divided by its total own funds requirements for credit risk that relates to all of its relevant credit exposures.

(3) Where, in accordance with Article 136(4) of the Capital Requirements Directive, a designated authority in another Member State sets a countercyclical buffer rate in excess of 2.5 per cent of total risk exposure amount calculated in accordance with Article 92(3) of the Capital Requirements Regulation, the following buffer rates shall apply to relevant credit exposures located in the Member State of that designated authority for the purposes of the calculation required under paragraphs (1) and (2) including, where relevant, for the purposes of the calculation of the element of consolidated capital that relates to the institution in question:

(a) where the Bank has not recognised the buffer rate in excess of 2.5 per cent in accordance with Regulation 126(1), domestically authorised institutions shall apply a countercyclical buffer of 2.5 per cent;

(b) where the Bank has recognised the buffer rate in accordance with Regulation 126(1), domestically authorised institutions shall apply the countercyclical buffer rate set by the designated authority in the other Member State.

(4) Where the countercyclical buffer rate set by a relevant third-country authority exceeds 2.5 per cent of total risk exposure amount calculated in accordance with Article 92(3) of Capital Requirements Regulation, the following buffer rates shall apply to relevant credit exposures located in that third country for the purposes of the calculation required under paragraphs (1) and (2) including, where relevant, for the purposes of the calculation of the element of consolidated capital that relates to the institution in question:

(a) where the Bank has not recognised the buffer rate in excess of 2.5 per cent in accordance with Regulation 126(1), domestically authorised institutions shall apply a countercyclical buffer rate of 2.5 per cent of total risk exposure amount;

(b) where the Bank has recognised the buffer rate in accordance with Regulation 126(1), domestically authorised institutions shall apply the countercyclical buffer rate set by the relevant third-country authority.

(5) Relevant credit exposures shall include all those exposure classes, other than those referred to in points (a) to (f) of Article 112 of the Capital Requirements Regulation, that are subject to—

(a) the own funds requirements for credit risk under Part Three, Title II of that Regulation,

(b) where the exposure is held in the trading book, the own funds requirements for specific risk under Part Three, Title IV, Chapter 2 of that Regulation or incremental default and migration risk under Part Three, Title IV, Chapter 5 of that Regulation, or

(c) where the exposure is a securitisation, the own funds requirements under Part Three, Title II, Chapter 5 of that Regulation.

(6) Institutions shall identify the geographical location of a relevant credit exposure in accordance with regulatory technical standards adopted in accordance with Article 140(7) of the Capital Requirements Directive.

(7) For the purposes of the calculation required under paragraphs (1) and (2)-

(a) a countercyclical buffer rate set by the Bank shall apply from the date specified in accordance with Regulation 125(7)(a)(v) or 126(2)(c), in the information published, where the effect of that decision is to increase the buffer rate,

(b) subject to subparagraph (c), a countercyclical buffer rate for a third country shall apply 12 months after the date on which a change in the buffer rate was announced by the relevant third-country authority, irrespective of whether that authority requires institutions incorporated in that third country to apply the change within a shorter period, where the effect of that decision is to increase the buffer rate,

(c) where the Bank sets the countercyclical buffer rate for a third country pursuant to Regulation 127(1) or (2), or recognises the countercyclical buffer rate for a third country pursuant to Regulation 126, that buffer rate shall apply from the date specified in the information published in accordance with Regulation 126(2)(c) or 127(5)(c), where the effect of that decision is to increase the buffer rate, and

(d) a countercyclical buffer rate shall apply immediately where the effect of that decision is to reduce the buffer rate.

(8) For the purposes of paragraph (7)(b), a change in the countercyclical buffer rate for a third country shall be considered to be announced on the date that it is published by the relevant third-country authority in accordance with the applicable national rules.

Capital conservation measures

Restrictions on distributions

129.

(1) An institution that meets the combined buffer requirement shall not make a distribution in connection with Common Equity Tier 1 capital to an extent that would decrease its Common Equity Tier 1 capital to a level where the combined buffer requirement is no longer met.

(2) An institution that fails to meet the combined buffer requirement shall—

(a) calculate the Maximum Distributable Amount (in these Regulations referred to as “MDA”) in accordance with paragraph (5), and

(b) notify the Bank of that MDA.

(3) Prior to calculating the MDA, an institution to which paragraph (2) applies shall not—

(a) make a distribution in connection with Common Equity Tier 1 capital,

(b) create an obligation to pay variable remuneration or discretionary pension benefits, or pay variable remuneration, if the obligation to pay was created at a time when the institution failed to meet the combined buffer requirements, or

(4) While an institution fails to meet or exceed its combined buffer requirement, it shall not distribute more than the MDA calculated in accordance with paragraph (5) through any action referred to in paragraph (3)(a), (b) or (c).

(5)(a) Institutions shall calculate the MDA by multiplying the sum calculated in accordance with paragraph (6) by the factor determined in accordance with paragraph (7).

(b) The MDA shall be reduced by any of the actions referred to in paragraph (3)(a), (b) or (c).

(6) The sum to be multiplied in accordance with paragraph (5) shall be A + B - C where—

A is the interim profits not included in Common Equity Tier 1 capital pursuant to Article 26(2) of the Capital Requirements Regulation that have been generated since the most recent decision on the distribution of profits or any of the actions referred to in paragraph (3)(a), (b) or (c),

B is the year-end profits not included in Common Equity Tier 1 capital pursuant to Article 26(2) of the Capital Requirements Regulation that have been generated since the most recent decision on the distribution of profits or any of the actions referred to in subparagraphs (a), (b) and (c) of paragraph (3), and

C is the amounts which would be payable by tax if the items specified in items A and B of this paragraph were to be retained.

(7) The factor, referred to in paragraph (5), shall be determined as follows:

(a) where the Common Equity Tier 1 capital maintained by the institution which is not used to meet the own funds requirement under Article 92(1)(c) of the Capital Requirements Regulation, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of that Regulation, is within the first (that is, the lowest) quartile of the combined buffer requirement, the factor shall be zero;

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