Regulatory Alerts2021-04-27
Ordinance No. 8 of the BNB of 27 April 2021 on Banks ’ Capital Buffers
The Bulgarian National Bank (BNB) issued Ordinance No. 8 of 27 April 2021 to establish the regulatory framework for banks' capital buffers, including the capital conservation buffer, institution-specific countercyclical buffer, Global Systemically Important Institution (G-SII) buffer, Domestic Systemically Important Institution (D-SII) buffer, and systemic risk buffer. The Ordinance mandates that banks maintain specific levels of Common Equity Tier 1 capital to cover these buffers, with the combined buffer requirement triggering distribution restrictions and loss-absorption measures upon non-compliance. It further details the BNB's methodology for identifying systemically important institutions, calculating buffer levels based on credit-to-GDP deviations and supervisory judgment, and coordinating with the European Systemic Risk Board (ESRB) and the European Commission for cross-border and systemic risk applications.