The Financial Supervisory Authority of the Central Bank of Iceland carries out an annual assessment of risk in the operations of systemically important financial institutions by means of a Supervisory Review and Evaluation Process (SREP). The process involves an assessment of the capital requirement for financial institutions which results in an additional capital requirement under Pillar 2.
The conclusion of this annual process for Íslandsbanki has now been made available. The Bank shall as of 30 June 2021 maintain an additional capital requirement of 2.5% of risk-weighted assets, which is an increase of 0.8 percentage points from the previous assessment. The Bank’s total capital requirement, taking into account capital buffers, therefore increases from 17.0% to 17.8%.
The increase is mostly due to temporary effects of COVID-19 and partially offsets the 2.0% reduction of the counter-cyclical capital buffer in March 2020. In the prospectus published on 7 June 2021 the Bank disclosed that the capital requirement was expected to increase and that the increase should be less than the reduction of the counter-cyclical buffer. This conclusion is therefore in line with the Bank’s expectations.
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With a history that dates from 1875, Íslandsbanki is an Icelandic universal bank with a strong customer focus. The Bank believes in moving Iceland forward by empowering its customers to succeed - reflecting a commitment to run a solid business that is a force for good in society. Driven by the ambition to be #1 for service, Íslandsbanki’s banking model is led by three business divisions that build and manage relationships with its customers. Íslandsbanki maintains a strong market share with the most efficient branch network in the country, supporting at the same time its customers’ move to more digital services. The Bank operates in a highly attractive market and, with its technically strong foundations and robust balance sheet, is well positioned for the opportunities that lie ahead. Íslandsbanki has a BBB/A-2 rating from S&P Global Ratings.