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ARTICLE · 03 JUNE 2019

IFRS 16 - Leases And The Impact On Credit Institutions

Deloitte Cyprus
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IFRS 16 is expected to have an impact on both the numerator and the denominator of the TCR.

CyprusFinance and Banking
Agis Agathocleous
Agis Agathocleous
Clea Evagorou
Clea Evagorou
Andreas Georgiou
Andreas Georgiou
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Under EU regulations, credit institutions are required to hold a certain amount of capital as part of their licensing conditions. One of the key measures of the capital requirements for a credit institution is the Total Capital Ratio.

This is the ratio of credit institution's capital to risk and it is used by regulatory authorities to ensure that it can absorb a reasonable amount of loss and ensure viability of the institution.

Under the requirements of Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV), banks must have top quality capital equivalent to at least 10.5 per cent (10.5%) of their risk-weighted assets which is defined as the total capital ratio of 8% plus 2,5% countercyclical buffer plus any additional Pillar 2 Capital Requirements.

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