Pursuant to Act on financial institutions and financial groups (Financial Institution Act) section 20-9, and section 20-25, the Norwegian Financial Supervisory Authority has stipulated a risk weighted minimum requirements for own funds and eligible assets (MREL) of 26,1 percent of adjusted risk weighted assets, based on relevant capital requirements at all times.
According to BRRD2, CET1-capital used to cover risk-weighted MREL cannot be used at the same time to cover the combined buffer requirement, hence the calculated actual need for subordinated capital and convertible debt is effectively 32,6 per cent of adjusted risk-weighted assets.
The effective MREL requirement will not be fulfilled with subordinated capital. The total requirement for subordinated capital will be calculated with formula given in BRRD2 article 45b, number 7, litra b, and constitutes for SpareBank1 Sørøst-Norge 27,1 % of risk weighted assets.
The total requirement for subordinated capital of 27,1 % shall, as a minimum, be phased in linearly and must be fully covered from 1 January 2024. From 1 January 2022, the effective requirement for subordination is 20 percent of the adjusted risk-weighted assets.
The minimum requirement for subordinated capital to be covered by 01.01.2022 (20 %) was 8.110 mNOK, based on relevant capital requirements and capital adequacy pr. 30.06.2021. Available CET1 to cover the effective MREL requirement and the minimum requirement for subordinated capital was at the same time 8.293 mNOK. SpareBank 1 Sørøst-Norge have, in addition, issued 1.550 mNOK senior subordinated debt.
Any changes to buffer requirements or Pilar 2-requirements will lead to changes in the MREL requirements accordingly.
Tønsberg 15.12.2021
For further information please contact:
Deputy CEO Geir Årstein Hansen, tel 913 22 127
Head of Treasury Per Grøtterød, tel. 913 22 138