Within the scope of the Supervisory Review and Evaluation Process (SREP), supervisory authorities assess and measure the risks that banks are exposed to. In particular, SREP shows capital requirements.

 

EZB SREP – 9.5% CET1 capital requirement for pbb

Munich, 28 January 2020 – The European Central Bank (ECB) informed pbb about the outcome of its Supervisory Review and Evaluation Process (SREP) 2019. 

The demand for common equity tier 1 capital (CET1) was set at 9.5% on a consolidated basis and effective 1 January 2020 thus being stable year on year. It includes a Total SREP Capital Requirement (TSCR) of 7% CET1 and a capital conservation buffer of 2.5% CET1. In addition, ECB applies a countercyclical buffer of 0.45% (2019: 0.35%). The TSCR demand for own funds was set at 10.5% on a consolidated basis.

As of 12th March, 2020, the EZB has made adjustments to the SREP-Requirements. Of the additional TSCR capital requirement, which remains unchanged at 2.5%, approximately 1.4% (56.25%) must now be CET1 capital and 1.9% (75%) Tier 1 capital. As a result, this reduces the SREP-requirement to around 8.4% CET1 and 10.4% Tier 1. The own funds requirement remains unchanged at 13%.

pbb’s capital basis significantly exceeds the demand from ECB and national competent authorities, even when applying anticipated effects from EBA guidelines and Basel IV. CET1 comprises of share capital and capital reserves; it represents the highest quality capital and is a measurement for the financial strength of a bank.

pbb has reported SREP outcome on a regular basis since 2016. ECB envisages the inaugural publication of SREP outcome for non-global systemically important banks under the Single Supervisory Mechanism on January 28.

Figure: SREP Requirements 2020 (without anticyclical buffer)