Capital buffer, variable (dynamic provisioning)

The proposal that the supervisory authority prescribe a higher regulatory capital ratio for individual institutions in good years. – However, this encounters difficulties for internationally active institutions with operations in different economic areas and uneven business cycles. In addition, it may be difficult to define what constitutes a “good year” for a bank, as there are many possible yardsticks, such as profit, sales, number of existing or new branches, number of employees, or even special ratios derived from certain balance sheet items. – See Banking Supervision, European, Basel-III, Capital Requirements Directive, Cook Ratio, capital adequacy, capital buffer, variable, Financial Soundness Indicators, G-Sifi, Tier 1 capital, leverage ratio, liquidity buffer, mark-to-funding approach. Stabilizers, automatic. – Cf. BaFin’s 2011 Annual Report, p. 154 f. (decisions by EU finance ministers; proposal for a capital buffer by the EBA), Financial Stability Report 2012, p. 90 f. (countercyclical capital buffer for loans), Deutsche Bundesbank Monthly Report of May 2013, p. 59 ff. (regulatory capital and capital buffers in the wake of Basel III), Deutsche Bundesbank Monthly Report of June 2013, p. 69 (overview of capital buffers under CRD-IV).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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