Identification of systemically important Cyprus credit institutions

Directive 2013/36/EU on the prudential supervision of credit institutions and investment firms requires what the directive defines as “systemically important institutions”, that is, institutions of such significance that their failure or malfunction could lead to systemic risk, to maintain appropriate contingency buffers of common equity tier one capital, over and above the levels required for other, non-systemically important, institutions.

The directive divides systemically important institutions into two categories: global systemically important institutions (“G-SIIs”) and other systemically important institutions (“O-SIIs”), assessed on the basis of factors including size, importance to the European or national economy, significance of cross-border activities and interconnectedness with the financial system.

Member states are responsible for identifying systemically important institutions and categorising them into G-SIIs and O-SIIs in accordance with guidelines issued by the European Central Bank. The Central Bank of Cyprus (“CBC”) has been designated as the Macro Prudential Supervisory Authority for Cyprus, with overall responsibility for identifying O-SIIs authorised in Cyprus and for setting the O-SII buffer.

On 25 October the CBC announced the results of its latest annual reassessment of the designation of credit institutions.  It identified five O-SIIs and set their respective additional capital buffers from 1 January 2019 as follows: Bank of Cyprus Public Company Limited 2%, RCB Bank Limited 1.5%, Hellenic Bank Public Company Limited 1.5%, Eurobank Cyprus Limited 1% and Αlpha Bank Cyprus Limited 0.5%.

For further information on this matter please contact Achilleas Malliotis or your usual contact at Elias Neocleous & Co LLC.