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Other systemically important institutions capital buffer

The other systemically important institutions (O-SII) capital buffer is one of the instruments available in Banco de Portugal’s macroprudential toolkit aiming at addressing the macroprudential policy intermediate objective of preventing the building up of systemic risk arising from misaligned incentives and moral hazard.

According to section IV of title VII – A of the Legal Framework of Credit Institutions and Financial Companies, the designated authority may impose higher capital requirements on O-SIIs, between 0 and 2% of the total risk exposure amount, in order to compensate for the higher risk that these institutions pose to the financial system due to their size, importance for the economy of the Member State in question or the European Union, complexity or degree of interconnection with other financial sector institutions and, in the event of insolvency, the potential contagion of these institutions to the rest of the non-financial and financial sectors.

The O-SIIs capital buffer must be build up of Common Equity Tier 1 and be applied on a consolidated basis. It will be revised annually or if a significant restructuring process occurs, such as a merger or an acquisition.

In Portugal, since no global systemically important institution (G-SII) was identified, the G-SII capital buffer does not apply.

The information required to be disclosed by Banco de Portugal according to Notice No. 4/2015 is provided below:

Banking groups identified as O-SII in 2019

 
1 According to the guidelines of the European Banking Authority, the threshold adopted for the identification process was 350 basis points.

O-SII capital buffer applied to each banking group as of 1 January 2020

Tentative date for next disclosure: 30 November 2020

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Any further information can be obtained through email: info@bportugal.pt