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Sparebanken Vest has received an advance notice of an updated Minimum Requirement for Own Funds and Eligible Liabilities (MREL)

11/24/2021 | 03:08am

Sparebanken Vest has received an advance notice of an updated MREL requirement
from the Norwegian Financial Supervisory Authority (NFSA). The MREL requirement
is determined at 26.4 per cent of adjusted Risk Weighted Assets, applicable at
all times. Since Common Equity Tier 1 (CET1) capital used to fulfill the risk
weighted MREL cannot, at the same time, be used to fulfill the Combined Buffer
requirement, the calculated actual need for Own Funds and Eligible Liabilities
will effectively be 34.4 per cent of adjusted Risk Weighted Assets. The
requirement will come into force from 1 January 2022.

This year's requirement takes into account the subordination cap in BRRD2. This
means that only parts of the MREL requirement needs to be fulfilled with
subordinated instruments. The cap is calculated as the highest of 8 per cent of
Total Assets and the formula Ax2+Bx2+C, where A is the Pillar 1 requirement, B
is the Pillar 2 requirement and C is the Combined Buffer requirement. It is the
latter that will be the relevant requirement, and based on the bank's capital
requirements as of 31 December 2020 this meant a cap of 27.4 per cent. The NFSA
has determined that the bank is required to have Own Funds and subordinated
liabilities of at least 27.4 per cent of the adjusted Risk Weighted Assets. CET1
used to fulfill the combined buffer requirement can be used to fulfill the
subordination requirement calculated by the aforementioned formula. The
difference between the effective MREL requirement of 34.4 per cent and the cap
on subordination (27.4 per cent) can be fulfilled with issued senior unsecured
debt with a residual maturity of more than 12 months, applicable at all times.

The subordination requirement shall, as a minimum, be phased in linearly during
the rest of the transitional period and shall be fulfilled entirely from 1
January 2024
. The starting point for the linear phase-in, as of 1 January 2022,
will be the effective minimum requirement for subordination of 21,5 % of
adjusted Risk Weighted Assets (the minimum requirement for subordination of 13.5
per cent plus the combined buffer requirement of 8 per cent).

Since the above is in line with the bank's expectations, no material changes are
expected between the advance notice and final requirement.

Bergen, 24 November 2021

For further information, contact:
EVP and CFO, Frank Johannesen, tel.: +47 952 65 971 and e-mail:
EVP and CRO, Jan-Ståle Hatlebakk, tel. +47 916 62 284 and and e-mail:
Director of Finance and IR, Hans Olav Ingdal, tel. +47 948 09 328 and e-mail:

This information is subject to the information requirements pursuant to the
Norwegian Securities Trading Act section 5-12.

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