Central bank raises capital buffers for Cyprus systemic banks

The Central Bank of Cyprus (CBC) has announced that it identified three credit institutions as Other Systemically Important Institutions for 2025 and increased their capital buffer requirements to strengthen the resilience of the domestic financial system.

The decision followed the annual review of credit institutions falling under the O-SII definition, which assesses systemic importance and determines the level of the O-SII capital buffer they must maintain due to their role in the economy.

The institutions identified as O-SIIs are the Bank of Cyprus, Eurobank Limited formerly known as Hellenic Bank Public Company Ltd, and Alpha Bank Cyprus Ltd, according to the Central Bank of Cyprus.

The central bank explained that the strengthening of the systemic importance of these institutions, either through organic growth or through mergers and acquisitions, led to an increase in the required O-SII capital buffers for each of the designated banks.

“This increase ensures that part of the profitability of these institutions is directed towards further strengthening their resilience, offsetting the higher risk arising from their systemic importance for the domestic financial system and the potential impact of any failure,” the Central Bank of Cyprus said.

The central bank stressed that, in its role as the national macroprudential authority, it continuously monitors developments in the financial system with the aim of identifying and assessing potential systemic risks.

“At the present stage, and beyond the risks already identified, particular importance is attached to the monitoring and assessment of geopolitical risk, country risk and concentration risk,” the Central Bank of Cyprus said.

“If deemed necessary, the Central Bank of Cyprus may activate additional macroprudential tools at its disposal to limit the accumulation of systemic risks and further strengthen the resilience of the financial sector,” it added.

According to the central bank, the annual review for 2025 was completed on November 21, 2025, in line with its policy for identifying O-SIIs and the methodology for setting the O-SII capital buffer requirement.

Based on the review, the Bank of Cyprus recorded a total score of 4,068 points and will be required to maintain an O-SII capital buffer of 2.25 per cent from January 1, 2026, compared with 1.9375 per cent from January 1, 2025.

Eurobank Limited recorded a total score of 3,938 points and will be subject to an O-SII capital buffer of 2.00 per cent from January 1, 2026, up from 1.50 per cent from January 1, 2025.

Alpha Bank Cyprus Ltd recorded a total score of 1,023 points and will be required to hold an O-SII capital buffer of 0.50 per cent from January 1, 2026, compared with 0.25 per cent from January 1, 2025.

The Central Bank of Cyprus said the adjustments reflect its ongoing effort to safeguard financial stability by ensuring that systemically important banks maintain sufficient capital to absorb potential shocks.