FI proposes update to its approach for assessing Pillar 2 guidance for Swedish banks

Due to the EU's new capital adequacy regulations that were implemented in Sweden between 2020 and 2021, Finansinspektionen can establish a so-called Pillar 2 guidance for each bank.

During the spring of 2021, FI decided on an approach for determining the size of the Pillar 2 guidance. This method has now been applied to approximately 30 banks and overall has been suitable and functioned well. We have been able to draw a number of lessons from the two years that we have been using the approach and believe that it is now appropriate to make a number of small improvements and updates.

FI therefore proposes new intervals for both the risk-based guidance and the leverage ratio guidance and that there should be an upper limit to how much the outcome of the sensitivity-based stress test can contribute to the final guidance. In addition, we also updated the descriptions of the process itself and made several smaller updates to the stress test approach.

Proposed entry into force and application

FI intends to apply the new approach in this year's supervisory review and evaluation process (SREP) from the date on which the updated memorandum is decided. The preliminary application date is as of 31 May 2023.
The firms that are affected are credit institutions subject to the Credit Institutions and Securities Companies (Special Supervision) Act (2014:968).

Written comments regarding the proposal and questions

Questions regarding the consultation should be directed to Amelie Stierna Sillén, amelie.stiernasillen@fi.se.

Written comments regarding FI's proposal should be submitted to Finansinspektionen, Box 7821, 103 97 Stockholm, Sweden, or via email to finansinspektionen@fi.se, no later than 2 May. Specify FI reference 23-9797.