The Financial Supervisory Authority of the Central Bank of Iceland (FME) carries out an annual assessment of risk in the operations of systemically important financial institutions by means of a Supervisory Review and Evaluation Process (SREP). The process involves an assessment of the capital requirement for financial institutions which results in an additional capital requirement under Pillar II.

The conclusions of this annual process for Arion Bank have now been made available. The Bank shall maintain an additional capital requirement of 3.2% of risk-weighted assets, which is an increase of 0.1 percentage points from the previous assessment. The additional requirement is mainly due to credit risk, concentration risk, market and interest rate risk and risk relating to subsidiaries. The Bank’s total capital requirement, taking into account capital buffers, therefore increases from 18.4% to 18.5%.