Published: 2020-12-22 15:30:00 CET
LHV Group
Company Announcement

Outcome of Supervisory Review and Evaluation Process by the FSA and AS LHV Group’s internal capital targets

In the beginning of December, the Estonian FSA, Finantsinspektsioon, presented LHV Group with the outcome of Supervisory Review and Evaluation Process (SREP) capital adequacy calculation. In comparison with earlier there were no changes in required capital targets.

According to the decision of the FSA, an additional requirement for own funds in the amount 1.73% applies to LHV Group, of which at least 0.42% must be covered by Core Tier 1 own funds and at least 0.56% by Tier 1 capital. In addition, an added capital requirement of 0.2% on deposits taken in from foreign financial institutions remained in place.

The Supervisory Board of LHV Group based on the FSA decision and adding to it internal buffers decided to set total CAD target ratio at 16.00%, Tier 1 ratio at 12.46% and Core Tier 1 ratio to 10.63%.

Underneath is the target split into components:

 Core Tier 1Tier 1Total CAD
Base requirement4.50%6.00%8.00%
Pillar 2 capital requirement0.42%0.56%1.73%
Non-resident financial intermediaries’ deposits according to Financial plan0.10%0.10%0.10%
Total SREP requirement5.02%6.66%9.83%
Capital conservation buffer2.50%2.50%2.50%
Systemic importance buffer (O-SII)1.00%1.00%1.00%
Systemic risk buffer0.00%0.00%0.00%
Discretionary counter-cyclical buffer0.00%0.00%0.00%
Total combined buffer3.50%3.50%3.50%
Total minimal regulatory requirement8.52%10.16%13.33%
Additional internally decided buffers2.11%2.30%2.67%
Group’s internal capitalization targets10.63%12.46%16.00%

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are LHV Pank and LHV Varahaldus. LHV employs over 500 people. LHV’s banking services are used by 247,000 clients, and pension funds managed by LHV have more than 180,000 active clients. LHV’s UK branch offers banking infrastructure to 140 international financial services companies, via which LHV’s payment services reach clients around the world.

Priit Rum
LHV Communication Manager
Phone: +372 502 0786