Law (2014:966) On Capital Buffers

Original Language Title: Lag (2014:966) om kapitalbuffertar

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Read the untranslated law here: http://rkrattsbaser.gov.se/sfst?bet=2014:966

Chapter 1. Introductory provisions



section 1 of this Act contains provisions concerning the various categories of

capital buffers and if intervention and restrictions when a

institution fails to meet the combined buffer requirement.



That certain provisions of this law also applies to fund management companies

and the aifm is apparent from Chapter 2. 10 and 10 bis of the law

(2004:46) about mutual funds and Chapter 7. section 6 of the Act

(2013:561) on alternative investment fund managers.



section 2 of this Act means



1. mixed financial holding company within the EEA: company

referred to in article 4.33 of European Parliament and Council

Regulation (EC) no 575/2013 of 26 June

prudential requirements for credit institutions and investment firms and

amending Regulation (EU) No 648/2012

(enforcement regulation),



2. subsidiary: such an undertaking referred to in article 4.16 of the

prudential regulation,



3. EEA: European economic area,



4. The ESRB ESRB pursuant to

European Parliament and Council Regulation (EC) no 1092/2010 by

november 24, 2010 on macro-prudential oversight of the financial

system at EU level and establishing a European

systemic risk Board,



5. financial holding companies within the EEA: the company that

referred to in article 4.31 in prudential regulation,



6. institutions: credit institutions under the Act (2004:297) on banking

and finance law, Swedish skeppshypotekskassan and

securities companies,



7. capital adequacy directive: European Parliament and Council

Directive



2013/36/EC of 26 June 2013 on access to the

the business of credit institutions and the prudential supervision of credit institutions

and securities companies, amending Directive 2002/87/EC

and repealing Directive 2006/48/EC and 2006/49/EC,



8. core tier 1 capital: capital referred to in article 50 of

prudential regulation,



9. the parent institutions within the EEA: undertakings referred to in article 4.68 in

prudential regulation,



10. on a consolidated or sub-consolidated basis: the way that institutions in

accordance with the provisions on supervision at group level in

articles 6 to 24 in prudential regulation must comply with the standards of

requirements,



11. system risk: the risk of a disruption in the financial

the system, which can have serious negative consequences for the

financial system and the economy,



12. system important institutions: an institution whose default rates

or improper operation can lead to systemic risk,



13. prudential regulation: European Parliament and Council

Regulation (EC) no 575/2013 of 26 June

prudential requirements for credit institutions and investment firms and

amending Regulation (EU) No 648/2012,



14. total risk-weighted exposure amount: the amount referred to in

Article 92 in prudential regulation,



15. investment companies: a Swedish Corporation that has a

permission to operate securities operations under the Act

(2007:528) securities market, and that is not a

banking companies or credit market companies under the law on

banking and finance law, and



16. transfers of value attached to the core tier 1 capital:



a) payout in the form of a cash dividend,



b) bonus issue or partial stock dividend or transfer

or distribution of fully or partly paid bonus shares or

other capital instruments referred to in article 26 (1) (a) in

prudential regulation,



c) redemption or purchase of own shares or

other capital instruments referred to in article 26 (1) (a) in

prudential regulation,



d) refund of the amount paid related to

instruments referred to in article 26 (1) (a) in

prudential regulation,



e) a transfer or distribution of items referred to in

Article 26 (1) (b) to (e) of prudential regulation.



section 3 of the enforcement of the provisions of

This law is followed.



Chapter 2. Institution specific requirements on capital buffers



Combined buffer requirement



1 § Institutions must, in addition to the requirements on core tier 1 capital

the provisions of article 92 of the regulation and supervision of a decision

If the particular capital base requirements under Chapter 2. section 1 of the Act (2014:968)

If the special supervision of credit institutions and

securities companies, have a core tier 1 capital equal to the

combined buffer requirement calculated in accordance with section 2.



2 § the combined buffer requirement is the sum of the

requirements for core tier 1 capital under this law follows from

capital conservation buffer, the institution specific

countercyclical capital buffer and



1. in the case that the systemic risk buffer is applied to

exposures in another country, the highest of the

systemic risk buffer and the applicable capital buffer under 5

Cape. section 6,



2. in the case that the systemic risk buffer applies only to

exposures in Sweden, the sum of the systemic risk buffer and

the applicable capital buffer according to Chapter 5. section 6.



Chapter 3. Buffer requirement



1 § Institutions must on an individual and group level have a

buffer requirement.



section 2 of capital conservation buffer to consist of

core tier 1 capital equivalent to 2.5% of the institution's

total risk-weighted exposure amounts.



section 3 of the small and medium-sized securities companies, fund management companies and

Aifm may be exempted from the requirement of

buffer requirement in accordance with the provisions

delivered with the support of 10. 1 § 1.



Chapter 4. Systemic risk buffer



General information about systemic risk buffer



section 1 of the financial supervision authority may, in order to prevent a

structural systemic risk that can cause serious

consequences for the stability of the financial system and

the real economy in Sweden, decide that institutions of all

or some of their exposures at the individual level,

in the group level and group level shall have a systemic risk buffer.



section 2 of the systemic risk buffer according to § 1 shall consist of

core tier 1 capital and amount to at least 1 per cent of

the institution's risk-weighted exposure amounts based on the

exposures that systemic risk buffer should be applied according to

3 – 7 sections.



Systemic risk buffer on exposures in Sweden and beyond

The EEA



paragraph 3 of the financial supervision authority, a month after the

the inspection has completed the notification requirement of article

133.11 in solvency directive in accordance with the

the conditions imposed by article 133.14 thereof

decide that the Institute should have a systemic risk buffer that is

to a maximum of 5% of the institution's risk-weighted

exposure amounts based on the institution's exposures in

Sweden or outside the EEA.



Systemic risk buffer must be set at more than 5 per cent of

the amount referred to in the first subparagraph only if

The FSA completed the notification requirement of article

133.12 in the solvency ratio directive and the measure approved by the

The European Commission in accordance with article 133.15 in same

directive.



Systemic risk buffer on exposures outside Sweden but within

The EEA



paragraph 4 of the financial supervision authority, a month after the

the inspection has completed the notification requirement of article

133.11 in solvency directive may decide that an institution

to have a systemic risk buffer which amounts to no more than 3%

of the institution's risk-weighted exposure amounts based on the

the institution's exposures outside Sweden but within the EEA.



§ 5 If the FSA decides whether a systemic risk buffer in

accordance with paragraph 4, to the same buffer level apply to the institution's

all exposures outside Sweden but within the EEA.



paragraph 6 of the financial supervision authority may decide that the Institute should have a

systemic risk buffer that is more than 3% of the

exposure amounts referred to in paragraph 4, if the inspection completed

the notification requirement in article 133.12 in

the capital adequacy directive, such a measure is approved by the

The European Commission in accordance with article 133.15 in same

directive.



Recognition of other countries ' systemic risk buffers



section 7 If the FSA recognised a systemriskbuffertvärde

established in another country within the EEA, the inspection

decide that institutions with exposures in the country for these

exposures shall have a systemic risk buffer equivalent to that

established in the country.



Chapter 5. Buffers for systemically important institutions and financial

holding company



Capital buffer at the group level for global systemically important

Institut



section 1 of the financial supervision authority shall decide which institutions on

group level should have a capital buffer for global systemically important

institutions under paragraph 2.



The first subparagraph shall not apply to institutions which are subsidiaries of

either a parent institution, a financial

holding company or a mixed financial

holding company in the EEA.



section 2 of the capital buffer according to § 1 shall consist of

core tier 1 capital and amount to at least 1 per cent and not more than

3.5% of the institution's overall risk-weighted

exposure amounts.



Capital buffer for other systemically important institutions



paragraph 3 of the financial supervision authority may, in addition to what follows from 1 and 2

§§, decide to Institute at the individual level, below group level

or group level should have a capital buffer in the case of the other

systemically important institutions under paragraph 4.



section 4 of the capital buffer for other systemically important institutions should

consist of core tier 1 capital and may be set to a maximum of 2

percent of the institution's overall risk-weighted exposure amounts.



§ 5 If an institution that should have a capital buffer in the case of the other

systemically important institution is a subsidiary of a global

systemically important institutions or to a parent institution within the EEA

who should have a capital buffer of other systemically important

institutions, the following applies. The capital buffer for

systemically important institutions that the institution may be ordered to have at

individual level or sub-group level must not be more

than the maximum of 1 per cent of its total risk-weighted

exposure amounts and the buffer value that applies to the Group

at the group level in accordance with the applicable capital buffer for

systemically important institutions.



Competing buffer requirements



section 6 Of the application of paragraphs 1 to 4 would lead to a


institutions have to at the group level have more than one

capital buffer for systemically important institutions, at the level

only the highest of these capital buffers may apply.



section 7 an application of 1 – 4 and 6 §§ would lead to a

institutions have to at the group level have both a

capital buffer for systemically important institutions and in accordance with

Chapter 4. a systemic risk buffer on the institution's exposures in a

other country, shall be the highest of these buffers on

group level.



If the need for a systemic risk buffer applies only to

exposures in Sweden, however, the capital requirement as a result

of systemic risk buffer in addition to the capital requirements of the

the applicable capital buffer for systemically important institutions.



section 8 Of the application of paragraphs 3 to 5, should lead to a

institution on an individual or sub-consolidated basis is

required to have a capital buffer of other systemically important

institutions and the application of Chapter 4. would lead to the

the Institute also is required to have a systemic risk buffer for

the institution's exposures in another country, should only the

the highest of these capital buffers on each level.



If demands for a systemic risk buffer applies only to

exposures in Sweden, however, the demand arising from the

systemic risk buffer in addition to the capital requirements of a

capital buffer for other systemically important institutions.



Chapter 6. Countercyclical capital buffer



The size of the institution specific countercyclical

the capital buffer



(1) an institution shall have an institution specific counter-cyclical

capital buffer consisting of core tier 1 capital, which amounts to

the institution's overall risk-weighted exposure amounts multiplied

with a weighted average of the countercyclical buffer

as referred to in paragraphs 4 and 5 shall apply for those countries in which the institution

have their relevant credit exposures.



2 § the countercyclical capital buffer should also be met at

group level.



Exemption from the requirement of a countercyclical capital buffer



section 3 of the small and medium-sized securities companies, fund management companies and

Aifm may be exempted from the requirement of counter-cyclical

capital buffer in accordance with regulations issued by

support of 10. 1, § 8.



Countercyclical buffer



4 § the institution specific countercyclical capital buffer should

are calculated on the basis of the countercyclical buffer as

determined in accordance with Chapter 7.



§ 5 if there has been established a countercyclical

buffer value for credit exposures in another country,

be applicable to the calculation of the institution-specific

countercyclical capital buffer the countercyclical

buffer value that the competent authority of that State has decided,

not more than 2.5%.



section 6, If the institution specific countercyclical capital buffer

shall be calculated on the basis of a countercyclical buffer value that has

established by a foreign competent authority in the EEA, shall

buffertvärdena with effect from the date

established by the foreign authority.



If the institution specific countercyclical capital buffer should

calculated based on a countercyclical buffer value that has

established by a competent authority outside the EEA, decision

to increase the setting take effect twelve months after the

date on which the new value is published by the authority.



Decision which means that the buffer is reduced shall apply

immediately.



Requirements on methods to calculate the maximum available amount



section 7 an institution shall have procedures that make it possible to

accordance with the regulations issued pursuant to Chapter 10. 1

§ 10 continuous calculate senior

disposal amount.



Chapter 7. Decision on countercyclical buffer



Determination of countercyclical buffer



section 1 of the financial supervision authority shall determine, for each quarter, a

countercyclical buffer Guide and a countercyclical

buffer value.



The countercyclical buffer Guide should be used as a

reference value for determining the countercyclical

is increased.



The countercyclical buffer rate should be the basis for

the calculation of the size of the institution-specific

countercyclical capital buffer in accordance with Chapter 6.



2 § The countercyclical buffer Guide and buffer rate

shall be determined in the manner and on the basis of the factors listed

in article 136(2) and 136.3 in capital adequacy directive.



3 § the countercyclical buffer rate should be between 0 and

2.5% of total risk-weighted exposure amounts and specified in

interval of 0.25%. If it is justified on the basis of the

factors referred to in article 136(2) and 136.3 in

the capital adequacy directive, the FSA set

a countercyclical buffer value that is higher than 2.5%

of the total risk-weighted exposure amount.



Decision on countercyclical buffer for exposures in

other countries



section 4 If a foreign authority has established a

countercyclical buffer value amounting to more than 2.5

% of total risk-weighted exposure amount,

The financial supervision authority may decide that the Swedish Institute for relevant

credit exposures in the country should implement a buffer value

exceeding 2.5% of total risk-weighted

exposure amounts.



Decision referred to in the first subparagraph may not lead to institution

for exposures concerned shall apply a higher buffer value

than that set by the foreign authority.



paragraph 5 of the financial supervision authority may establish a countercyclical

buffer value as Swedish institutes of credit exposures in

a country outside the EEA to apply in the calculation of the

institution specific countercyclical capital buffer if the competent

authority in that country



1. has not established and published a countercyclical

buffer value, or



2. has established a countercyclical buffer value that is

insufficient to adequately protect

institutions against the risks associated with excessive

credit growth in the country.



The date when the decision on buffer settings take effect



paragraph 6 of the decision to establish or increase a

countercyclical buffer value must contain an indication of the

time when the buffer begins to take effect.



Decisions to the effect that the level of buffer rate increases should begin

expire twelve months after the decision was announced.

If there are special reasons, the decision takes effect at a

previous date.



The decision to lower the buffer value will apply immediately.



7 § When a countercyclical buffer value is lowered, the decision

contain information about how long the lower buffer rate

is expected to continue.



Publication of decisions



paragraph 8 of the financial supervision authority shall inform the ESRB and publish

decision on countercyclical buffer in accordance with

Articles 136.7, 137(2) and 139(5) in

the capital adequacy directive.



Chapter 8. Interference and restrictions on the combined

buffer requirement is not met



Maximum available amount and capital preservation plan



(1) an institution that does not meet the combined

buffer requirement under Chapter 2. section 2 of the financial supervision authority shall be



1. in accordance with the regulations issued on the basis of 10

Cape. 1 § 10 report the highest available amount, and



2. within five working days of the buffer requirement does not

longer met submit a capital preservation plan

shows how the Institute, within a reasonable period of time to achieve the

combined buffer requirement.



If, having regard to the nature and extent of the institution's

operations there are reasons for it, the financial supervision authority may permit

to capital preservation plan be submitted to the supervision authority within the

a maximum of 10 working days.



section 2 Of the financial supervisory authority considers that the measures shown

capital preservation plan does not restore the Institute's

core tier 1 capital, the Inspectorate to intervene.



The financial supervision authority shall then submit to the Institute to strengthen

the capital base or impose restrictions that are stricter

than those referred to in paragraph 3.



Restrictions on institutions ' right to take value transfers

accommodation



section 3, an institution that does not meet the combined

buffer requirement may not



1. make a transfer of value linked to the institution's

core tier 1 capital,



2. commit to pay variable remuneration or

discretionary pension benefits or pay out such mobile

compensation where the obligation to pay arose at a

time that the Institute did not satisfy the combined

buffer requirement,



3. make payments linked to tier 1 capital.



An institution may not take any measure referred to in

the first subparagraph, if the action causes the Institute no longer

meet the combined buffer requirement.



Actions that do not result in a decrease of the profit

or core tier 1 capital are not covered by the prohibition laid down in the first

paragraph.



section 4 of the prohibition in section 3 does not apply



1. an institution which, in accordance with paragraph 1 are calculated

maximum available amount and measures within this

amount, or



2. If the application of the provision leads to a

cessation of payments that can be the basis for putting

Institute of business.



§ 5 an institution that intends to take action under paragraph 4 of

1 shall inform the financial supervision authority before action is taken.



section 6, if an institution does not comply with the requirements of this chapter;

the financial supervision authority may apply the provisions of intervention

in the laws that regulate the activities of the Institute.



The same applies if the



1. an institution does not comply with a systemic risk buffer as

determined by the financial supervisory authority in accordance with Chapter 4, and



2. an action pursuant to section 2 is not expected to lead to a

satisfactory management of systemic risk.



Chapter 9. Fees



section 1 of the financial supervision authority may charge fees for the examination of

applications and notifications under this Act.



10 Cape. Appropriations




section 1 of the Government or the authority, as the Government determines

may provide for



1. criteria for which securities companies, fund management companies and

Aifm in accordance with Chapter 3. paragraph 3 may be exempted from the requirement

to maintain a buffer requirement,



2. the principles to be taken into account when determining and

the grading of the systemic risk buffer according to Chapter 4. section 1,



3. the determination of the geographic affinity of exposures

with respect to the systemic risk buffer as well as how the geographical

systemriskbuffertkraven, consistent,



4. assessment criteria for when an institution shall be appointed to

global system essential or should be moved to a higher

category of global systemically important institutions,



5. what other systemically important institutions should be identified and how

assessment of the associated kapitalbuffertkrav in accordance with 5

Cape. 3 and 4 sections,



6. which credit exposures in accordance with Chapter 6. paragraph 1 shall

taken into account in the calculation of the

the capital buffer,



7. the calculation of the weighted average of the

countercyclical buffertvärdena according to Chapter 6. section 1,



8. criteria for which securities companies, fund management companies and

Aifm in accordance with Chapter 6. paragraph 3 may be exempted from the requirement

maintaining a countercyclical capital buffer,



9. obligation on the institutions to enter their

geographic area of credit exposures,



10. how the maximum available amount in accordance with Chapter 8. paragraph 1 shall

be calculated and reported,



11. the requirement that a capital conservation plan under Chapter 8. 1 §

shall comply with, and



12. notification obligation in accordance with Chapter 8. § 5.



section 2 of the Government may provide for such fees

referred to in Chapter 9. § 1.



11 kap. Appeals



paragraph 1 of the decision taken by the financial supervision authority notifies the according to this law

or pursuant to regulations adopted on the basis of

the law may be appealed to the administrative court. This

does not apply to decisions on matters referred to in section 20 of the first

paragraph 5 the Administrative Procedure Act (1986:223).



Leave to appeal is required for an appeal to the administrative court.



The financial supervision authority may decide that the decision shall apply

immediately.