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Systemically important credit institutions and investment firms

On 22 March 2013, the Ministry of Finance put forward a legislative proposal on new capital requirements for credit institutions and investment firms to implement expected new EEA rules corresponding to the EU CRR/CRD IV framework.

The proposal includes a separate capital buffer requirement for systemically important credit institutions and investment firms of 1 per cent CET1 capital from 1 July 2015, increased to 2 per cent CET1 capital from 1 July 2016. According to the proposal, the Ministry may in a regulation determine criteria for assessing the systemic importance of credit institutions and investment firms, and establish special rules and special capital adequacy requirements for such institutions and firms.

The Ministry of Finance has today asked the Financial Supervisory Authority of Norway (Finanstilsynet) to prepare the following in collaboration with Norges Bank:

  1. An overview of announced and implemented systems for the identification of – and the imposition of special requirements on – domestic systemically important credit institutions and investment firms in other Nordic countries and in certain other European countries.

  2. An assessment of the quantitative criteria that should be applied to identify domestic systemically important credit institutions and investment firms in Norway. The criteria should form the basis of an overall assessment methodology for the identification of systemically important institutions and firms, in line with the Basel Committee on Banking Supervision's framework for dealing with domestic systemically important banks of October 2012.

  3. An assessment of the qualitative criteria and discretionary considerations which should supplement the quantitative criteria in the aforementioned assessment methodology for the identification systemically important institutions and firms.

  4. An analysis of – and specific indication of – which institutions and firms in Norway that would be considered systemically important in accordance with the quantitative and qualitative criteria. The analysis should include an examination of the methodology's robustness to foreseeable changes over time in the variables that underlie the identification of systemic importance. In addition, the systemic importance of the larger regional banks in Norway should be assessed.

  5. An assessment of whether the special capital adequacy requirements for domestic systemically important credit institutions and investment firms should be differentiated by degree and type of systemic importance.

  6. An assessment of whether there should be established special rules for systemically important institutions and firms in other areas, such as corporate governance, organisational structure, crisis resolution etc.

  7. A draft consultation paper and draft regulation rules on systemically important credit institutions and investment firms in accordance with the assessments mentioned in paragraphs 2-6 above, and in line with the relevant parts of the Ministry's legislative proposal of 22 March 2013.

 

The assessments and drafts shall be submitted to the Ministry of Finance by 1 November 2013.

 

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