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Cap­i­tal buffer for sys­tem­i­cal­ly im­por­tant in­sti­tu­tions

Capital buffer for global systemically important institutions (G-SIIs)

The main purpose of the G-SII buffer is to make large, highly interconnected, complex banks with intentional reach more resilient by increasing their capital. G-SIIs are determined annually based on internationally defined criteria. The G-SII-Buffer is definted of each G-SII individually. The higher the degree of systemic importance, the higher the requirement for the additional capital buffer. Systemic importance is measured in relation to the global banking system. The G-SII buffer can range from 1% to 3.5%. The buffer must be satisfied at the consolidated level. The G-SII is governed by section 10f of the Banking Act.

Capital buffer for other systemically important institutions (O-SIIs)

The objective of the O-SII buffer is similar to that of the buffer for global systemically important banks. Its focus is on banks that play an important role in their country’s economy because of their size, interconnectedness and cross-border activities. BaFin and the Bundesbank jointly identify O-SIIs in Germany, taking into account relevant guidelines of the European Banking Authority (EBA). Systemic importance is measured in relation to the respective national banking system. The individually defined buffer can be specified on a consolidated or partially consolidated basis or at the individual institution level. In the case of a buffer level of 3% or more, approval from the European Commission must be obtained. The O-SII buffer is governed by section 10g of the Banking Act. As a general rule, credit institutions are required to meet only the highest of the two buffers – the G-SII buffer or the O-SII buffer.