Germany's Federal Financial Supervisory Authority mandates reciprocal application of Austria’s 1% sectoral systemic risk buffer for banks with material Austrian construction and real estate exposures

Germany's Federal Financial Supervisory Authority (BaFin) issued a general administrative order requiring German institutions to apply, on a reciprocal basis, the Austrian Financial Market Authority’s sectoral systemic risk buffer of 1.0% to specified risk exposures in Austria. The requirement applies at individual, sub-consolidated and consolidated levels and is triggered where the relevant Austrian exposures exceed EUR 100 million per institution. The buffer applies to exposures to non-financial corporations in Austria, excluding non-profit housing associations, operating in the NACE sectors F41 (construction of buildings), F43 (specialised construction activities) and L68 (real estate activities). The materiality threshold is assessed on solo, sub-consolidated and consolidated bases, taking into account total exposures held via branches, direct cross-border lending and subsidiaries. BaFin retained the ESRB-recommended EUR 100 million threshold and rejected requests to raise it to EUR 500 million or to extend the implementation period, citing proportionality, consistency with the ESRB’s reciprocity framework and the availability of data through supervisory reporting. The order is deemed notified on the day after public announcement and enters into force one month after that announcement. It can be revoked in whole or in part with future effect, and BaFin noted it will review the measure in line with the Austrian authority’s periodic review cycle. An objection may be filed within one month of notification.