The Bank of Portugal, acting as Portugal’s macroprudential authority, has revised the methodological framework used in the annual exercise to identify Other Systemically Important Institutions (O-SIIs) and determine the associated O-SII capital buffer. The updated approach will be applied in the 2025 identification and buffer-setting exercise, taking effect from 1 January 2026. The revised methodology reflects recent regulatory developments, including the increase in the O-SII buffer cap from 2% to 3%, and aligns the framework with the European Central Bank (ECB) floor methodology for setting a minimum buffer rate. It also incorporates recent structural changes in the Portuguese banking system, including a higher weight of branches of EU-headquartered banking groups and lower concentration of banking activity in the Autonomous Regions of Madeira and the Azores. The framework was presented to systemically important institutions, the National Council of Financial Supervisors (CNSF) and the ECB, which did not object. The Bank of Portugal noted the framework may be reassessed if warranted by banking system developments or regulatory changes.
Bank of Portugal 2025-04-28
Bank of Portugal revises methodology for identifying O-SIIs and setting capital buffers in the 2025 exercise
The Bank of Portugal revised its framework for identifying Other Systemically Important Institutions (O-SIIs) and setting the O-SII capital buffer, effective January 2026. The updated methodology raises the O-SII buffer cap from 2% to 3% and aligns with the European Central Bank's floor methodology. It also considers structural changes in the Portuguese banking system, like increased EU banking group presence and decreased regional concentration.