Systemically important institutions buffer

Published: 8/11/2017
The systemically important institutions buffer is a capital buffer used as additional protection for the increased risk arising from a bank's size, its standing in the banking system of the Republic of Croatia and the EU, the significance and size of its cross-border activities and from its interconnectedness or the interconnectedness of the banking group it belongs to with the rest of the financial system.

The improvement of the loss-absorbing capacity of systemically important institutions is a preventive macroprudential tool aimed at limiting contagion that might arise from insolvency or stress situations in general for systemically important institutions.

As from 2016, other systemically important institutions buffer (O-SII) is applied to all banks that have been identified as significant or systemically important due to their size, interconnectedness or noticeable cross-border activities. The current level of this requirement is 2% for 6 banks and 0.2% for 3 banks.

In addition, the CNB uses the globally systemically important institutions buffer (G-SII), which is applied to those financial institutions that have been identified according to the G-SIFI[1] criteria agreed among the G20 members. There are no globally systemically important institutions in Croatia. However, some parent banks, owning the capital in Croatian banks, have that status.