FMA amended the Capital Buffer Regulation 2021
At the end of 2022, the Austrian Financial Market Authority (FMA) amended the Capital Buffer Regulation 2021. The change resulted in the obligation of Austria’s systemically important banks to increase their capital buffers within a range of 0.25 and 0.5 percentage points.
The change follows a recommendation by the Financial Market Stability Board (FSMB) to reduce systemic risks resulting from additional uncertainties, among which are the conflict between Russia and Ukraine, increasing energy prices, and high inflation. In line with the new regulation, the systemic risk buffer (SyRB) and the buffer for systemically important institutions (OSII buffer) are defined individually for each institution by also reflecting unconsolidated and consolidated situations. The buffers are to be built up fully by the end of 2023 in accordance with the prescribed level per affected bank.
In an official comment, the FMA stated that a solid capital base would increase the ability of banks to withstand any losses, and at the same time, their stability and resilience would be increased. Moreover, the measure should support the good rating of the Austrian banking system, which we are respectfully a part of, during critical situations and thus ensure relatively low refinancing costs.
