Systemic Risk Buffer

The systemic risk buffer is a macroprudential policy instrument aiming at preventing or mitigating the build-up of systemic risks that cannot be addressed by other capital buffers and macroprudential policy measures. Releasing it during periods of stress helps soften the impact of systemic risks.

The systemic risk buffer consists of CET1 capital and is expressed as a percentage of the total risk exposure amount of credit institutions. It can be set in multiples of 0.5% and may exceed 3% provided that the relevant procedures laid down in EU law are respected.

The Bank of Greece as designated authority is responsible for setting the systemic risk buffer rate for Greece and define subsets of sectoral exposures to which the systemic risk buffer may be applied such as exposures secured by real estate (see Law 4261/2014 and Bank of Greece Executive Committee Act 197/2/21.12.2021). It should be pointed out that the systemic risk buffer may be set for all or a subset of institutions and/or subsets of exposures (sectoral systemic risk buffer). Once set, the systemic risk buffer rate must be reviewed at least every second year.

In case an institution fails to fully meet the requirement for the systemic risk buffer, it is subject to restrictions on distributions of dividends, bonus payments and payments on Additional Tier 1 (AT1) instruments and any additional measures that the Bank of Greece may decide if it deems that the improvement of CET1 capital is unsatisfactory.

The Bank of Greece has set neither a sectoral nor a broader systemic risk buffer rate as yet.


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