The systemic risk buffer

The purpose of the systemic risk buffer (SRB) is to suppress the systemic risk arising from the potential destabilisation of relevant banks. The destabilisation of systemically most important banks could undermine confidence in the banking sector’s ability to provide its services effectively. This, in turn, could have serious adverse effects on the financial system and the Czech economy as a whole.

The Czech National Bank’s decision on which banks will be required to maintain the buffer and on the buffer rates to be applied is based on an assessment of the systemic importance of each bank made using a number of indicators describing four key parameters of the bank: size, complexity, substitutability and interconnectedness (see the first thematic article in Financial Stability Report 2012/2013).

Domestic banks have different degrees of systemic importance, and the SRB rates set by the Czech National Bank for banks depend on this degree. Specifically, the buffer is only set for banks that occupy the top few places in the notional ranking of systemic importance.

SRB rates were set for the four systemically most important banks on 1 November 2014. As a result of the first regular review of the set of banks required to maintain the systemic risk buffer, which was conducted in 2016, the buffer was set for the five systemically most important banks with effect from 1 January 2017. The second review, made in 2018, left the SRB rates unchanged. The latest review was conducted in 2020 using end-2019 data. On the basis of the updated degrees of domestic systemic importance, the Czech National Bank decided to leave the SRB rates unchanged. The Czech National Bank will review the reasons for setting the SRB rate at least once every two years. However, after the transposition of CRD V into the national legislation, it will start to use the buffer for other systemically important institutions (O-SII) instead of the SRB to mitigate risks connected with the systemic importance of banks.

Systemic risk buffer rate

Institution name Rate
from 1 Nov 2014
Rate
from 1 Jan 20171
Česká spořitelna, a.s. 3.0% 3.0%
Československá obchodní banka, a. s. 3.0% 3.0%
Komerční banka, a.s. 2.5% 3.0%
UniCredit Bank Czech Republic and Slovakia, a.s. 1.0% 2.0%
Raiffeisenbank a.s. - 1.0%

1 The rates were left unchanged after the reviews conducted in 2018 and 2020.