Communications - SIM and SIM Groups: Amendment to the Transitional Regime for the Capital Conservation Buffer

SIM and SIM Groups: Amendment to the Transitional Regime for the Capital Conservation Buffer.

1. Premise

This Communication modifies the implementing rules of EU Directive 36/2013 (CRD IV) regarding the capital conservation buffer (CCB) applicable to SIMs authorized for proprietary trading and subscription and/or placement with firm commitment or guarantee assumption. These rules are contained in the Communication of 31.3.2014 (1), which is to be understood as integrated and partially replaced by this Communication, as provided for in paragraph 2.

The modification responds to the need to keep the CCB regulations applicable to SIMs aligned with those of banks, whose rules on the capital conservation buffer have been subject to a similar intervention.

2. Modifications to the Capital Conservation Buffer Regulations

In the implementation of the CRD IV directive, the aforementioned Communication had provided that: i) the capital conservation buffer would apply in full, using a coefficient of 2.5%, at the consolidated level for SIM groups and, at the individual level, for SIMs not belonging to banking groups or SIM groups; ii) other SIMs subject to the CCB would apply an individual capital conservation buffer coefficient of: 0.625% for 2014, 2015, and 2016; 1.25% for 2017; 1.875% for 2018; 2.5% from January 1, 2019.

This Communication modifies the previous regulations, providing that SIMs authorized for proprietary trading and subscription and/or placement with firm commitment or guarantee assumption, both at the individual and consolidated levels, are required to apply a minimum capital conservation buffer (CCB) coefficient of:

• 1.25% from January 1, 2017, to December 31, 2017;
• 1.875% from January 1, 2018, to December 31, 2018;
• 2.5% from January 1, 2019.

This modification affects exclusively the minimum amount of the capital conservation buffer (CCB); other rules for determining the CCB remain unchanged. Therefore, SIMs do not use Common Equity Tier 1 (CET1) capital held to satisfy the capital conservation buffer requirement to meet the own funds requirements under Article 92 of the CRR (Pillar 1) and those, above the minimum regulatory level, possibly required by the supervisory authority in corrective interventions (Pillar 2) (2).

Furthermore, in accordance with the Communication of 31.3.2014, the exercise of national discretion provided by CRD IV (Art. 129) remains in effect, which allows for the exemption of small-to-medium-sized SIMs from the application of the capital conservation buffer (CCB).

1 Ref. Communication of 31.3.2014 published in Supervisory Bulletin 3/2014. 2 Ref. Circular No. 285/2013, Part One, Title III, Chapter 1, Section III, para. 5, cited in the aforementioned Communication of March 31, 2014.

3. Entry into Force

This regulatory amendment enters into force on January 1, 2017. For the period from its publication until December 31, 2016, the previous regulations will continue to apply.

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This communication was issued following the opinion of CONSOB, pursuant to Article 6, paragraph 1, of the TUF.

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