Buffer for other systemically important institutions

(1) The Federal Institute may order that an other systemically important institution must hold, on a consolidated or sub-consolidated basis or at individual institution level, a buffer for other systemically important institutions consisting of Common Equity Tier 1 capital, of up to 3 percent of the total risk exposure amount determined under Article 92(3) of Regulation (EU) No 575/2013.
(1a) Subject to the European Commission's consent, the Federal Institute may require an other systemically important institution to hold, on a consolidated or sub-consolidated basis or at individual institution level, a buffer for other systemically important institutions consisting of Common Equity Tier 1 capital of more than 3 percent of the total risk exposure amount calculated under Article 92(3) of Regulation (EU) No 575/2013.
(2) The Federal Institute determines, in agreement with the Deutsche Bundesbank, at least annually, which institutions, EU parent institutions, EU parent financial holding companies, mixed EU parent financial holding companies, parent institutions, parent financial holding companies, or mixed financial holding companies with their registered office in Germany are classified as other systemically important, on a consolidated or sub-consolidated basis or at individual institution level (other systemically important institutions). In the quantitative, and, as a subsidiary matter, also qualitative, analysis carried out at the relevant level, it takes into account, for the entity examined, in particular the following factors: 1. size, 2. economic importance for the European Economic Area and the Federal Republic of Germany, 3. cross-border activities, and 4. interconnectedness with the financial system.
(3) The Federal Institute reviews, at least annually, whether and at what rate the buffer for other systemically important institutions is necessary. In doing so, the existing requirements and recommendations of the European Banking Authority and the European Systemic Risk Board in this regard must be observed. The order may be made only where the buffer for other systemically important institutions 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 of the European Economic Area is hindered. Where an other systemically important institution is subject to the output floor own funds minimum when determining the total risk exposure amount under Article 92 of Regulation (EU) No 575/2013, the Federal Institute ensures, at the latest at the review of the buffer under the first sentence, that the amount of the buffer to be held remains appropriate.
(3a) The Federal Institute publishes the methodology applied for classifying other systemically important institutions and for setting the rate of the buffer, having regard to the relevant quantitative and qualitative indicators and threshold values. The existing guidelines of the European Banking Authority in this regard must be observed.
(4) At least one month before announcing the order of a new or amended buffer for other systemically important institutions, the Federal Institute must notify the intended order to the European Systemic Risk Board. Where the Federal Institute intends to order, under subsection (1a), that an other systemically important institution must hold, on a consolidated or sub-consolidated basis or at individual institution level, a buffer for other systemically important institutions consisting of Common Equity Tier 1 capital of more than 3 percent of the total risk exposure amount determined under Article 92(3) of Regulation (EU) No 575/2013, it must notify this to the European Systemic Risk Board at least three months before the intended publication of the order. The notifications should in each case contain at least the following particulars: 1. a detailed statement of reasons why setting a buffer for other systemically important institutions is justified and proportionate to the identified risks, 2. a detailed explanation of the likely positive and negative effects of the buffer on the internal market of the European Economic Area, and 3. the rate of the buffer set.
(5) The Federal Institute informs the other systemically important institutions of the result of its annual reviews under subsections (2) and (3), and publishes a list, to be kept up to date, of the institutions classified as other systemically important. It notifies the European Systemic Risk Board of the names of the institutions classified as other systemically important, and transmits to it the results of its annual review of the determination of the other systemically important institutions and the buffers ordered. The list to be published under the first sentence contains the material quantitative and qualitative results of the analysis underlying the decisions, having regard to the indicators and threshold values used. The Federal Institute also transmits to the European Banking Authority the values of the indicators used for the analysis for all institutions that have not already been excluded from the analysis on account of their small size as measured by balance-sheet total. The existing guidelines of the European Banking Authority in this regard must be observed.
(6) Where the other systemically important institution is a subsidiary undertaking of a global systemically important institution, or of an EU parent institution in another state of the European Economic Area, that is an other systemically important institution within the meaning of Article 131(1) of Directive 2013/36/EU and is subject to a buffer for other systemically important institutions on a consolidated basis, the buffer under subsection (1) may not exceed the lower of the following amounts: 1. the sum of the higher of the two rates applicable to the group on a consolidated basis for the buffer for global systemically important institutions or the buffer for other systemically important institutions, and 1 percent of the total risk exposure amount calculated under Article 92(3) of Regulation (EU) No 575/2013, and 2. 3 percent of the total risk exposure amount calculated under Article 92(3) of Regulation (EU) No 575/2013, or the rate of the buffer approved by the Commission for the group on a consolidated basis under subsection (1a).
(7) Further particulars are set out in the statutory instrument under section 10(1), first sentence, point 5(d).