FI proposes amended rules and a change in the application of banks’ capital requirements

2020-09-25 | Regulations Proposals for New Regulatory Code EBA News Capital requirements Basel Bank

FI is proposing regulatory amendments and a change in the application of capital requirements for Swedish banks in order to adapt to the EU’s so-called banking package.

The banking package for risk mitigation measures amends the regulatory framework for capital adequacy and the management of banks in crisis. The objective is to both strengthen the banks' resilience to crises and ensure that critical functions can be maintained during a crisis.

The capital requirement regulations are laid down in both a regulation (Capital Requirements Regulation) that is directly applicable in Sweden and a directive (Capital Requirements Directive) that is implemented into Swedish law through Swedish legislation and regulations.

The proposals that FI is now submitting for consultation are based on the legislative amendments proposed in the Swedish Government's proposal to the Council on Legislation, "Ändringar i regelverket om kapitaltäckning" (only available in Swedish), that was decided on 24 September 2020.

Regulatory amendments

FI proposes to amend the following regulations:

Finansinspektionen's regulations and general guidelines (FFFS 2014:12) regarding prudential requirements and capital buffers
Finansinspektionen's regulations (FFFS 2011:1) regarding remuneration systems in credit institutions and securities companies
Finansinspektionen's regulations and general guidelines (FFFS 2008:25) regarding annual accounts for credit institutions and securities companies
Finansinspektionen's regulations and general guidelines (FFFS 2014:4) regarding the management of operational risks

FI is also proposing new regulations and general guidelines regarding the obligation of credit institutions conducting business through a branch in Sweden and that have a head office in a third country to report certain information.

Changes in the application

FI is also proposing changes in the application of the so-called Pillar 2 requirements, FI's position related to the implementation of Pillar 2 guidelines, and the application of the capital buffers. These proposals are presented in the memorandum "New capital requirements for Swedish banks" (see below for a summary in English).

Proposed entry into force and application

FI proposes that the regulatory amendments that implement the amendments to the Capital Requirements Directive enter into force at the same time as the corresponding legislative amendments. The amendments that supplement the Capital Requirements Regulation are proposed to enter into force on 28 June 2021.
The date for when FI will start to apply the amendments and changes described in the memorandum "New capital requirements for Swedish banks" to a large degree will be dependent on when the relevant legislative amendments enter into force.

Written feedback regarding the proposals

Written feedback regarding the regulatory proposals shall be sent to Finansinspektionen, Box 7821, 103 97 Stockholm or via email to finansinspektionen@fi.se. FI shall have received the written feedback no later than 6 November. Please specify the reference number, FI Ref. 20-4596.

Inquiries regarding the consultation may be directed to Sara Ehnlund Martinussen at sara.ehnlundmartinussen@fi.se or by calling +46 (0)8 408 984 09.

Written feedback regarding the memorandum "New capital requirements for Swedish banks" (a summary is available in English) shall be sent to Finansinspektionen, Box 7821, 103 97 Stockholm or via email to finansinspektionen@fi.se. FI shall have received the written feedback no later than 23 October. Please specify the reference number, FI Ref. 20-20990.

Inquiries regarding the consultation may be directed to Maria Blomberg maria.blomberg@fi.se or by calling +46 (0)8 408 981 79.

About EU's banking package

The banking package was adopted during the spring of 2019. The amendments to the regulatory framework implement reforms that governments, central banks and supervisory authorities agreed on at an international level within the Basel Committee for Banking Supervision and the Financial Stability Board after the most recent financial crisis.

In addition, the European Commission, based on the action plan to create a capital market union, has taken the initiative for additional changes in part to reduce unnecessary administrative burden and to rectify the varying application of the regulatory framework by member states. The result is more harmonised EU regulations in the application of the tools that supervisory authorities use to determine the banks' capital requirements.

Proposals on changes in the application

Regulatory proposals (In Swedish)

Lagrådsremiss: Ändringar i regelverket om kapitaltäckning (Swedish Government)