Finansinspektionen’s view on capital and distributions
UBS Nordic Financial Services Conference
Karin Lundberg, Executive Director Banking September 2, 2021
COVID-19 effects on the Swedish banking system
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Indexed profit - Large banks Indexed profit - Category 2
Indexed corporate loans Loan loss provisions (%)- Large banks
A bank should be able to use its capital to absorb losses in going concern so that the capital is there to mitigate resolution or liquidation.
The capital requirements should be sensitive both to idiosyncratic and systemic risks.
Fundamental principles for capital
regulation
Note: The illustrations are schematic and simplified. Risk weighted capital requirement (RW), Leverage ratio requirement (LR)
Leverage ratio requirement affects buffer usability
P1
P1 CCB P2G
P2R P2G
RW LR
Pillar 2 Guidance (P2G) Pillar 2 Requirement (P2R)
Capital Conservation Buffer (CCB) Pillar 1 (P1)
Note: The illustration is schematic and simplified.
Risk-weighted capital requirement
P1 P2R SRB O-SIICCB CCyB
P2G
Pillar 1 (P1)
Capital buffer for systemically important banks (O-SII)
Countercyclical Capital Buffer (CCyB) Pillar 2 Guidance (P2G)
Pillar 2 Requirement (P2R)
Capital Conservation Buffer (CCB)
Systemic risk buffer (SRB)
Note: Supervisory Review and Evaluation Process (SREP), Pillar 2 Guidance (P2G)
P2G assessment process
Stress test analysis
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Expert assessment P2G add-onEBA stress Sensitivity test
stress test Macro
stress test Communicated
in SREP
