Parliament passes bill to reduce capital conservation buffer!

The House of Representatives passed into law on Friday a bill to improve harmonization with the European acquis, which reduces the capital conservation buffer of financial institutions from 2.5% to 1.25%.

After a long discussions 37 MPs from the ruling party DISY and the main opposition party AKEL voted in favour. Six MPs from the three of the smaller parties, Citizens’ Alliance, Green Party and far-right ELAM voted against, while six MPs from the centrist DIKO abstained.

The changes to legislation add new provisions concerning the capital buffer requirements for the banks that will gradually increase until the end of 2018. More specifically the capital conservation buffer until 31 December 2016, consists of Common Equity Tier 1 capital equal to 0,625 % of the total of the risk-weighted exposure amounts of the licensed credit institutions incorporated in the Republic.

For the period from 1 January 2017 until 31 December 2017 the capital conservation buffer consists of Common Equity Tier 1 capital equal to 1,25 % of the total of the risk-weighted exposure amounts of the licensed credit institutions incorporated in the Republic.

For the period from 1 January 2018 until 31 December 2018 the capital conservation buffer shall consist of Common Equity Tier 1 capital equal to 1,875 % of the total of the risk-weighted exposure amounts of the institution.

source: CNA