Capital buffer for other systemically important institutions

In accordance with Article 131(8) of Directive EU 2013/36/EU (CRD) a national authority may set a capital buffer for an O-SII at subsidiary level that shall not exceed the lower of:   the sum of the higher of the G-SII or the O-SII buffer rate applicable to the group on a consolidated basis and 1 % of its total risk exposure amount (TREA) calculated in accordance with Article 92(3) of Regulation (EU) No 575/2013 (CRR); and 3% of the TREA amount calculated in accordance with Article 92(3) of Regulation (EU) No 575/2013 (CRR) or the rate the Commission has authorised to be applied to the group on a consolidated basis in accordance with paragraph 5a of Article 131 CRD. Article 131(8) CRD also clarifies that the above levels of the buffer rates refer to the TREA that applies on an individual or sub-consolidated basis. 1% of its total risk exposure amount (TREA), provided it does not exceed the rate of the G-SII or O-SII capital buffer at group level. In detail, two different scenarios can be distinguished: 1) the group in Country A is subject to the requirements of a G-SII or O-SII buffer of 1% or lower and its O-SII subsidiary in Country B has also been designated as O-SII on a solo (or sub-consolidated) level. In this case the O-SII buffer requirement in Country B cannot be set higher than 1% of the TREA of the subsidiary in Country B, according to the conditions of Article 131(8); 2) the group in Country A is subject to the requirements of G-SII or O-SII buffer higher than 1% and its subsidiary in Country B has also been designated as O-SII on a solo (or sub-consolidated) level. In this case the O-SII buffer requirement in Country B can be set up to the buffer rate of the group at consolidated level, according conditions of Article 131(8)(a). Article 131(8)(a) CRD refers to 1% of the TREA of the subsidiary in country B while Article 131(8)(b) applies the buffer rate at consolidated level of the group in country A to the TREA of the subsidiary in country B.