Understanding Basel III, What Is Different After January 2016

Understanding Basel III, What Is Different After January 2016

The German Federal Financial Supervisory Authority (Bundesanstalt fÃ¼r Finanzdienstleistungsaufsicht â€“ BaFin) has for the first time set a countercyclical capital buffer for Germany, with effect from 1 January 2016.

At present, the buffer is set at 0% because the indicators examined currently do not reveal any excessive lending in Germany.

Institutions must factor the relevant value for Germany into their calculations for the institution-specific countercyclical capital buffer, applying the total significant credit risk exposures in Germany.

Institutions having made significant loans in other countries must factor in the countercyclical capital buffer applicable in those countries on a pro rata basis.

The individual (institution-specific) countercyclical capital buffer is calculated as the weighted average of the capital buffer in Germany and abroad.

The institutions must then maintain this buffer as a percentage of their total risk exposure amount in their common equity tier 1 capital.

Going forward, BaFin will review on a quarterly basis whether the value applicable in Germany is appropriate in light of the current risk situation and lending trend and will adjust the buffer as necessary.

It will conduct its review on the basis of analyses and data provided by the Deutsche Bundesbank.
The European Central Bank is involved in the decision-making process through the Single Supervisory Mechanism (SSM).

Moreover, BaFin takes into account the recommendations of the Financial Stability Commission (Ausschuss fÃ¼r FinanzstabilitÃ¤t â€“ ASF).

Background
In times of excessive credit growth, banks are required to build up an additional capital buffer.
This buffer may be used up in times of crisis and used to mitigate losses.
This usually amounts to between 0% and 2.5% and can be set in 0.25 percentage-point increments.

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Country USA
Author George Lekatis
Binding Kindle Edition
Format Kindle eBook
IsAdultProduct
NumberOfPages 149
PublicationDate 2016-02-06
ReleaseDate 2016-02-06

Country	USA
Author	George Lekatis
Binding	Kindle Edition
Format	Kindle eBook
IsAdultProduct
NumberOfPages	149
PublicationDate	2016-02-06
ReleaseDate	2016-02-06

Understanding Basel III, What Is Different After January 2016

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