S.L. 371.16 Art. 9BGuidance on additional own funds.

(1) Pursuant to the strategies and processes referred to in article 17C of the Act, credit institutions shall set their internal capital at an adequate level of own funds that is sufficient to cover all the risks that a credit institution is exposed to and to ensure that the credit institution’s own funds can absorb potential losses resulting from stress scenarios, including those identified under the supervisory stress test referred to in regulation 6.

(2) The competent authority shall regularly review the level of the internal capital set by the credit institution in accordance with sub-regulation (1) as part of the reviews and evaluations performed in accordance with regulations 3 and 7, including the results of the stress tests referred to in regulation 6. Pursuant to that review, the competent authority shall determine for the credit institution the overall level of own funds it considers appropriate.

(3) The competent authority shall communicate its guidance on additional own funds to the credit institution. The guidance on additional own funds shall be the own funds exceeding the relevant amount of own funds required pursuant to Parts Three, Four and Seven of the CRR, Chapter 2 of Regulation (EU) 2017/2402, regulation 9(1)(a) and Article 128(6) of the CRD or pursuant to Article 92(1a) of the CRR, as relevant, which are needed to reach the overall level of own funds considered appropriate by the competent authority pursuant to sub-regulation (2).

(4) The competent authority’s guidance on additional own funds pursuant to sub-regulation (3) shall be institution-specific. The guidance may cover risks addressed by the additional own funds requirement imposed pursuant to regulation 9(1)(a) only to the extent that it covers aspects of those risks that are not already covered under that requirement.

(5) Own funds that are used to meet the guidance on additional own funds communicated in accordance with sub-regulation (3) to address risks other than the risk of excessive leverage shall not be used to meet any of the following:

(a) the own funds requirements set out in points (a), (b) and (c) of Article 92(1) of the CRR;

(b) the requirement laid down in regulation 9A imposed by the competent authority to address risks other than the risk of excessive leverage and the combined buffer requirement:

Provided that own funds that are used to meet the guidance on additional own funds communicated in accordance with sub-regulation (3) to address the risk of excessive leverage shall not be used to meet the own funds requirement set out in point (d) of Article 92(1) of the CRR, the requirement laid down in regulation 9A imposed by the competent authority to address the risk of excessive leverage and the leverage ratio buffer requirement referred to in Article 92(1a) of the CRR.

(6) The failure to meet the guidance referred to in sub-regulation (3) where a credit institution meets the relevant own funds requirements set out in Parts Three, Four and Seven of the CRR and in Chapter 2 of Regulation (EU) 2017/2402, the relevant additional own funds requirement referred to in regulation 9(1)(a) and, as relevant, the combined buffer requirement or the leverage ratio buffer requirement referred to in Article 92(1a) of the CRR shall not trigger the restrictions referred to in Article 141 or 141b of the CRD.