Nordic pan-European banking agency Nordea reported last Friday that the outcome from the 2015 Supervisory Review and Evaluation Process (SREP) has been finalised and will lead to an expected Common Equity Tier 1 ratio requirement of 15.4% by the end of the third quarter.

This was compared to 14.9% as reported by the Swedish Financial Supervisory Authority (FSA) on 2 September 2015. By 30 June 2015, Nordea had a Common Equity Tier 1 ratio of 16.0%. Inadequate second line of defence and its involvement in the governance of the IRB system and modelling, as well as an add-on for operational risk from inspections relating to IT and key processes, are responsible for these increased requirements.

The bank reported that it was aware of the deficiencies and claimed it had already started to implement mitigating actions, with a view to putting them in place by the first quarter 2016. It will then be up to the college of supervisors to decide when the add-ons will be removed.

Nordes stated that its capital policy to maintain a management buffer of 50-150bps above the capital requirements remained.