Countercyclical capital buffer

(1) An institution must hold an institution-specific countercyclical capital buffer consisting of Common Equity Tier 1 capital. The first sentence applies correspondingly to institutional groups, financial holding groups, and mixed financial holding groups to which at least one institution belongs that must meet the requirement in the first sentence at individual institution level, and to institutions within the meaning of Article 22 of Regulation (EU) No 575/2013.
(2) The institution-specific countercyclical capital buffer rate is the weighted average of the rates for the countercyclical capital buffers that apply, or are applied in accordance with the following subsections, in Germany, in the other states of the European Economic Area and in third countries, and in the associated European and overseas countries, territories, and jurisdictions in which the institution's relevant risk exposures are located. To calculate the weighted average, institutions apply the respective applicable countercyclical capital buffer rate to the respective ratio of the total own funds requirements for credit risk determined under Articles 107 to 311 and 325 to 377 of Regulation (EU) No 575/2013 in the relevant state of the European Economic Area, the relevant third country, and the associated European and overseas countries, territories, and jurisdictions, to the total own funds requirements for credit risk for all relevant risk exposures.
(3) The rate of the domestic countercyclical capital buffer is 0 to 2.5 percent of the total risk exposure amount determined under Article 92(3) of Regulation (EU) No 575/2013. The rate is set by the Federal Institute in increments of 0.25 percentage points. The Federal Institute assesses, on a quarterly basis, the intensity of cyclical systemic risk and determines which rate of the domestic countercyclical capital buffer is appropriate. It sets this rate in accordance with its assessment, or adjusts it where necessary. In doing so, the Federal Institute takes into account deviations of the credit-to-GDP ratio from its long-term trend and any recommendations of the Financial Stability Committee. The Federal Institute may, where necessary, set a rate higher than 2.5 percent.
(4) Where the Federal Institute sets the rate for the domestic countercyclical capital buffer for the first time at a value above zero, or increases the existing rate, it determines the date from which institutions must apply the increased rate in calculating the institution-specific countercyclical capital buffer. This date may not be more than twelve months after the date of publication of the initial setting or the increase of the rate for the domestic countercyclical capital buffer. Where less than twelve months lie between the date under the first sentence and the publication of the rate for the domestic countercyclical capital buffer, this shorter period must be justified by exceptional circumstances, such as a significant increase in the risks caused by excessive credit growth, or a situation in which the earnings position of institutions in the European Economic Area makes a faster build-up of the domestic countercyclical capital buffer possible.
(5) Where the Federal Institute lowers the existing rate for the domestic countercyclical capital buffer, it simultaneously announces a period during which no increase in the rate for the domestic countercyclical capital buffer is expected. The Federal Institute may resume the procedure at any time, including before the expiry of the announced period, and set or increase the rate for the domestic countercyclical capital buffer again. The Federal Institute publishes, on its website, the rate for the domestic countercyclical capital buffer set for the respective quarter and the particulars under subsections (3) and (4).
(6) The Federal Institute may recognise the countercyclical capital buffer rate set by another state of the European Economic Area or a third country for the purposes of calculating the institution-specific countercyclical capital buffer by institutions licensed in Germany, where the rate exceeds 2.5 percent of the total exposure amount referred to in Article 92(3) of Regulation (EU) No 575/2013. For as long as the Federal Institute has not recognised the higher rate, institutions licensed in Germany must apply a rate of 2.5 percent for the risk exposures located in that state when calculating the institution-specific countercyclical capital buffer.
(7) Where the competent authority of a third country has not set and published a countercyclical capital buffer rate, the Federal Institute may set the rate that institutions licensed in Germany must apply for the risk exposures located in that state when calculating the institution-specific countercyclical capital buffer.
(8) Where the competent authority of a third country has set and published a countercyclical capital buffer rate, the Federal Institute may set a higher countercyclical capital buffer rate that institutions licensed in Germany must apply for the risk exposures located in that state when calculating the institution-specific countercyclical capital buffer, where it can be sufficiently confident that the rate set by the competent authority of the third country is not sufficient to appropriately protect the institutions from the risks of excessive credit growth in that third country.
(9) Where the Federal Institute recognises a countercyclical capital buffer rate under subsection (6), or sets a countercyclical capital buffer rate under subsections (7) or (8), the Federal Institute publishes, on its website, that rate and at least the following further particulars:
1. the state of the European Economic Area or the third country for which that rate applies,
2. the date from which institutions licensed in Germany must apply the countercyclical capital buffer rate in calculating their institution-specific countercyclical capital buffer,
3. in cases where that date is less than twelve months after the date of publication under this subsection, the exceptional circumstances justifying a shorter period for application.
(10) Further particulars are set out in the statutory instrument under section 10(1), first sentence, point 5(a).