The O-SII buffer is a macroprudential policy instrument aiming at reducing moral hazard and strengthening the resilience of systemically important credit institutions.
Moral hazard arises when a institution expects not to be let to fail given its systemic importance (“too big to fail”). An O-SII buffer limits excessive risk-taking by a systemically important institution through higher capital requirements, thus reducing moral hazard. Moreover, it cushions the systemic impact of misaligned incentives by strengthening the systemically important institution’s capital buffer to absorb potential losses and thus reduces contagion risk.
The O-SII buffer consists of Common Equity Tier 1 (CET1) capital and its rate is set by the Bank of Greece at a level up to 3% of the total risk exposure amount on a consolidated, sub-consolidated or individual basis, as applicable, and is reviewed at least once a year. An O-SII buffer rate higher than 3% is subject to European Commission authorisation.
The Bank of Greece is also responsible for identifying, among institutions authorised in Greece, other systemically important institutions (O-SIIs). O-SIIs are identified on an annual basis so as to consider the application of an O-SII buffer. It should be noted that there are no global systemically important institutions (G-SIIs) in Greece.
In this context, the Bank of Greece has applied the methodology included in the European Banking Authority (EBA) guidelines in relation to the assessment of O-SIIs (EBA/GL/2014/10), transposed in Greece by Bank of Greece Executive Committee Act 56/18.12.2015. This methodology was further specified by Bank of Greece Executive Committee Act 221/1/17.10.2023. These guidelines lay down harmonised criteria, indicators, scoring methodology and thresholds, towards achieving convergence of national O-SII identification procedures, thus ensuring comparability, clarity and transparency in the assessment of systemically important institutions at EU level.
The methodology applied by the Bank of Greece in order to identify O-SIIs in Greece and set the O-SII buffer takes into account the specificities of the domestic banking sector as well as the revised European Central Bank (ECB) O-SII floor methodology for the calibration of the O-SII buffer rate as set out in the ECB Governing Council statement on macroprudential policies dated 20.12.2024.
In accordance with this methodology, a score is calculated for each institution indicating its systemic importance based on specific criteria that relate to size, importance for the economy, complexity and interconnectedness of the institution with the financial system. These four criteria each consist of one or more mandatory indicators which are used as a minimum in the calculation of each institution’s score, expressed in basis points (bps). The 350 bps has been set as an indicative threshold. Institutions with a score equal to or higher than the threshold are identified as O-SIIs. The table below shows the mandatory indicators and relevant weights used for the scoring of O-SIIs in Greece.
| Table: Mandatory indicators for the scoring of O-SIIs in Greece |
| Criterion | Indicators | Size |
| Size | Total assets | 25% |
|
Importance | Value of domestic payment transactions | 8.33% |
| Private sector deposits from depositors in the EU | 8.33% |
| Private sector loans to recipients in the EU | 8.33% |
|
Complexity/ Cross-border activity | Value of OTC derivatives (notional) | 8.33% |
| Cross-jurisdictional liabilities | 8.33% |
| Cross-jurisdictional claims | 8.33% |
| Interconnectedness | Intra-financial system liabilities | 8.33% |
| Intra-financial system assets | 8.33% |
| Debt securities outstanding | 8.33% |
| Source: Guidelines on the criteria to determine the conditions of
application of Article 131(3) of Directive 2013/36/EU (CRD) in relation to the
assessment of other systemically important institutions (O-SIIs). |
Since 1 January 2016, the Bank of Greece has applied the above methodology and the following institutions have been identified as O-SIIs on a consolidated basis: Alpha Bank S.A., National Bank of Greece S.A., Piraeus Financial Holdings S.A., and Eurobank Ergasias Services and Holdings S.A.
For 2026 the Bank of Greece set the O-SII buffer rates as follows:
- at 1.25% for Eurobank Ergasias Services and Holdings S.A. at consolidated level, and
- at 1.00% for the following O-SIIs:
- Alpha Bank S.A. at solo and consolidated level,
- Eurobank S.A. at solo level,
- National Bank of Greece S.A. at solo and consolidated level,
- Piraeus Bank S.A. at solo level, and
- Piraeus Financial Holdings S.A. at consolidated level.