Systemic risk buffer

(1) The Federal Institute may order that all institutions, or certain types or groups of institutions, must hold a systemic risk buffer consisting of Common Equity Tier 1 capital. The systemic risk buffer may be ordered for all risk exposures located in Germany, in another state of the European Economic Area, or in a third country, or for a subset of these risk exposures. The rate is set by the Federal Institute in increments of 0.5 percentage points or a multiple thereof. The first to third sentences apply correspondingly to institutional groups, financial holding groups, and mixed financial holding groups to which at least one CRR credit institution belongs that meets the requirements under the first to third sentences at individual institution level, and to credit institutions within the meaning of Article 22 of Regulation (EU) No 575/2013.
(2) The systemic risk buffer may be ordered in order to reduce or avert systemic or macroprudential risks, including risks caused or exacerbated by environmental risks, in particular due to climate change, that
1. may lead to a disruption with serious negative effects on the national financial system and the real economy in Germany, and
2. are not covered by Regulation (EU) No 575/2013 or by the capital buffers under sections 10d, 10f, and 10g. The order may be made only where the systemic risk buffer does not constitute a disproportionate impairment of the financial system, or of parts of the financial system, of another state or of the European Economic Area as a whole, such that the functioning of the internal market or of the European Economic Area is hindered. The systemic risk buffer must be reviewed at least every two years. For risk exposures located in another state of the European Economic Area, a systemic risk buffer may be ordered only where this is done uniformly for all risk exposures located in states of the European Economic Area. The cases under subsection (9) are excepted from this.
(2a) Where a systemic risk buffer applies to an institution's total risk exposure amount, and that institution is subject to the output floor own funds minimum, the Federal Institute ensures, at the latest at the review under subsection (2), that the amount of the capital buffer to be held remains appropriate.
(3) Before publishing a systemic risk buffer under subsection (7), the Federal Institute notifies the European Systemic Risk Board of the order. Where an institution for which a systemic risk buffer is ordered is a subsidiary undertaking of an undertaking with its registered office in another state of the European Economic Area, the Federal Institute also notifies the competent authority of that state of the European Economic Area of the decision. Where the order of the systemic risk buffer concerns risk exposures located in third countries, the Federal Institute also notifies the European Systemic Risk Board of this. For a systemic risk buffer, or a combination of systemic risk buffers, that does not exceed a rate of 3 percent for any affected risk exposure, the notification must be made one month before publication under subsection (7). The notification should in each case contain at least the following particulars:
1. a precise description of the systemic or macroprudential risks that the order of the systemic risk buffer is intended to avert or reduce;
2. reasons why the risks under point 1 pose a threat to financial stability at national level to an extent that justifies the systemic risk buffer at the intended rate;
3. reasons why the systemic risk buffer is considered likely to be suitable and proportionate to avert or reduce the risks under point 1;
4. an assessment of the likely positive and negative effects of the order of the systemic risk buffer on the internal market, having regard to all information accessible to the Federal Institute;
5. the rate of the systemic risk buffer that the Federal Institute intends to order, the risk exposures to which it is to apply, and the institutions to be covered by the order;
6. where the buffer applies to all risk exposures, reasons why there is no overlap with the buffer under section 10g.
(4) For a systemic risk buffer, or a combination of systemic risk buffers, that reaches a rate of more than 3 percent and up to 5 percent for any of the affected risk exposures, the Federal Institute requests, in the course of the notification under subsection (3), an opinion from the European Commission and the European Systemic Risk Board. The Federal Institute may order a systemic risk buffer, or a combination of systemic risk buffers, under the first sentence for risk exposures located in Germany or in third countries after
1. the European Commission has issued a favourable opinion, or
2. where the European Commission has issued an unfavourable opinion, the Federal Institute has, vis-à-vis the European Commission, given reasons why the order of the buffer is necessary notwithstanding the European Commission's opinion. Where the order of the systemic risk buffer under the first sentence also affects institutions whose parent institution has its registered office in another state of the European Economic Area, the Federal Institute may order the systemic risk buffer only where it has, in the notification under subsection (3), requested an opinion from the European Commission and the European Systemic Risk Board. Where the competent authority of an affected state of the European Economic Area objects to the order of the systemic risk buffer under the first sentence against an institution whose parent institution has its registered office in that state, or where both the European Commission and the European Systemic Risk Board issue unfavourable opinions, the Federal Institute may refer the matter to the European Banking Authority for a dispute-settlement procedure under Article 19 of Regulation (EU) No 1093/2010. Where a matter is referred under the fourth sentence, the Federal Institute suspends its decision on setting the buffer until the European Banking Authority has adopted a decision.
(5) For a systemic risk buffer, or a combination of systemic risk buffers, that reaches a rate of more than 5 percent for any of the affected risk exposures, the Federal Institute obtains the authorisation of the European Commission under Article 133(12), third subparagraph, of Directive 2013/36/EU.
(6) The systemic risk buffer may also be ordered and publicly announced by general ruling without prior consultation.
(7) The order of the systemic risk buffer must be published on the Federal Institute's website. The publication should contain at least the following particulars:
1. the rate of the systemic risk buffer ordered,
2. the institutions, types, or groups of institutions that must comply with the systemic risk buffer,
3. the risk exposures or subsets of risk exposures to which the systemic risk buffer applies,
4. reasons for the order of the systemic risk buffer,
5. the date from which the systemic risk buffer must be complied with,
6. the states in which risk exposures included in the order of the systemic risk buffer are located. The publication of the particulars under point 4 must be omitted where it is to be feared that this could endanger the stability of the financial markets.
(8) Subsections (6) and (7), first and second sentences, apply correspondingly to lifting or resetting the order of a systemic risk buffer. Where the resetting of a systemic risk buffer results in a reduction of its rate for individual risk exposures, subsections (4) and (5) do not apply.
(9) The Federal Institute may recognise a systemic risk buffer ordered in another state of the European Economic Area. To this end, it orders that all institutions, or types or groups of institutions, must apply the systemic risk buffer ordered in that other state of the European Economic Area, insofar as it relates to risk exposures located in that other state of the European Economic Area. Subsections (6) and (7) apply correspondingly to the recognition. In deciding on recognition, the Federal Institute must take into account the particulars published by the other state of the European Economic Area when ordering the systemic risk buffer. The Federal Institute must inform the European Systemic Risk Board of the recognition. For the purposes of subsections (3), (4), and (5), the rate of a buffer recognised under the first sentence is not to be taken into account.
(10) The Federal Institute may request the European Systemic Risk Board to issue a recommendation under Article 16 of Regulation (EU) No 1092/2010 to one or more other states of the European Economic Area for recognition of a systemic risk buffer.
(11) Where the Federal Institute recognises a systemic risk buffer ordered in another state of the European Economic Area under subsection (9), that systemic risk buffer may apply in addition to a systemic risk buffer under subsection (1), provided these buffers cover different risks. Where the buffer recognised under subsection (9) covers the same risks as the buffer ordered under subsection (1), only the higher systemic risk buffer must be complied with.
(12) Further particulars are set out in a statutory instrument issued under section 10(1), first sentence, point 5(b).