The Business of Credit Institutions Law, 66(I)/1997, was amended for purposes of harmonisation with “EU Directive 2013/36 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (Capital Requirements Directive) and “EU Regulation 575/2013 on prudential requirements for credit institutions and investment firms” (Capital Requirements Regulation). Specifically, the new legislation aims to improve the quantity and quality of capital of credit institutions and sets out rules on the prudential supervision of credit institutions by the Central Bank of Cyprus. In particular, the law contains detailed provisions regarding corporate governance, the suitability of the persons that effectively direct the business of a credit institution and the remuneration policies of senior management. Also, additional administrative sanctions may be imposed by the Central Bank of Cyprus in case of violation of the provisions of the basic law and/or the Capital Requirements Regulation 575/2013.
Furthermore, for purposes of further ensuring the stability of the financial system, the new law on the Macroprudential Supervision of Credit Institutions (the “Macroprudential Supervision of Institutions Law of 2015”, N. 6(I)/2015) designates the Central Bank of Cyprus as the competent authority for implementing specific provisions of both the Capital Requirements Directive and the Capital Requirements Regulation in cooperation with other supervisory authorities in the financial sector. In this respect, the Central Bank shall:
• ensure that credit institutions maintain a capital conservation buffer, a countercyclical capital buffer and a systemic risk buffer;
• decide on any exemption from the above requirement, ensuring that it does not threaten the stability of the financial system;
• identify, on a consolidated basis, global systemically important institutions (G-SIIs), and, on an individual, sub-consolidated or consolidated basis, as applicable, other systemically important institutions (O-SIIs);
• monitor the macroprudential or systemic risk in Cyprus jurisdiction.