GREECE Law and Practice Contributed by: Paris Tzoumas, Vivian Efthymiou and Dimitrios Mekakas, Zepos & Yannopoulos
ting the counter-cyclical capital buffer rate for Greece on a quarterly basis. From 1 January 2016 until 2024, the BoG has kept the counter-cyclical capital buffer rate for Greece at 0% (ie, at the lowest end of the per - missible range), thus not affecting the capital requirements of credit institutions. However, the BoG recently adopted act 235/2/7.10.2024, pro - viding that the counter-cyclical capital buffer rate will be set at 0.25% as of 1 October 2025. The O-SII buffer consists of common equity Tier 1 Capital and its rate is set by the BoG at a level of up to 2% of the total risk exposure amount and is reviewed at least once a year. The BoG has defined that the four Greek systemic credit institutions qualify as O-SIIs (and should comply at a solo level, while their parent financial hold - ings should also comply at a consolidated level) and set the applicable O-SII buffer rates (1 – for Eurobank Ergasias Services and Holdings S.A. at consolidated level – and 1.25% for all O-SIIs for 2024 and for 2025). The BoG has decided not to activate the systemic risk buffer and the global systemic institutions buffer. The BoG has additional macro-prudential tools to apply towards credit institutions. In this respect, in March 2024, the Bank of Greece enacted bind - ing borrower-based measures (BBMs) for loans and other credit to natural persons secured by residential real estate (RRE) located in Greece, which become applicable on 1 January 2025. Supervisory Review and Evaluation Process Credit institutions are required to assess the ade - quacy of their own capital through the Internal Capital Adequacy Assessment Process, which is then subject to review by the regulator in the context of the Supervisory Review and Evalua - tion Process (SREP) where the results from the stress tests are also assessed. The BoG or the
ECB may impose additional capital requirements in the context of the SREP assessment, if such evaluation reveals major deficiencies or in other cases provided by law. In particular, the Pillar Two requirement (P2R), which is determined on the basis of the SREP, is a credit institution-specific capital requirement which applies additionally in order to cover risks that are underestimated or not covered by the minimum capital require - ment. The capital the ECB or BoG asks credit institutions to keep based on the SREP also includes the Pillar Two Guidance (P2G), which indicates to credit institutions the adequate level of capital to be maintained to provide a sufficient buffer to withstand stressed situations. Unlike the P2R, the P2G is not legally binding. Additional Own Funds Requirements Following the transposition of the CRD V into Greek law, the competent authority may impose additional own funds requirements in accord - ance with Articles 104a et seq. In addition, credit institutions are obliged to set their inter - nal capital at an adequate level of own funds sufficient to cover all the risks expected to be covered by a credit institution, and to ensure that the credit institution’s own funds can absorb potential losses resulting from stress scenarios, including those identified under the supervisory stress test. Guidance on additional own funds is provided to credit institutions by the compe - tent authorities. The quantitative capital require - ments under CRD IV and CRR are supplemented by the obligation under the BRRD as amended by BRRD II for credit institutions to satisfy at all times a minimum requirement for own funds and eligible liabilities (“MREL”), which is deter - mined by the competent resolution authority on an annual basis (on a credit institution-specific basis). The target for the MREL requirement (as determined under the BRRD II by the resolution authority) is composed of a loss-absorption
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