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Irish arms of Citigroup, RBS, UniCredit told to hold extra capital

A woman uses an ATM at a Royal Bank of Scotland (RBS) branch in London, Britain, February 25, 2010. REUTERS/Toby Melville/File Photo

DUBLIN (Reuters) - Ireland's Central Bank on Monday added domestic lender permanent tsb IL0A.I and subsidiaries of Royal Bank of Scotland RBS.L, Citigroup C.N and UniCredit CRDI.MI to its list of systemically important banks that have to hold extra capital.

Like other European banks, Irish lenders identified as systemically important to the domestic economy due to their size and market share have to hold the additional capital, known as Core Tier 1, to increase defences against future shocks.

The Central Bank last year set the amount of extra capital for Ireland’s two largest banks, Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I), at 1.5 percent of risk-weighted assets to be phased in at a rate of 0.5 percent from July 2019.

After its first review of the so-called Other Systemically Important Institutions (O-SIIs) buffers, it set the mark for permanent tsb, RBS’ Irish unit Ulster Bank and Citigroup at 0.25 percent in 2019, rising to 0.5 percent a year later.

Citigroup shifted the head office of its European retail banking operation to Dublin from London last year.

UniCredit, whose unit is based in Ireland’s International Financial Services Centre (IFSC) and is primarily involved in structured finance and treasury activities, will have to just hold an additional 0.25 percent of capital by July 2019.

The O-SIIs can be set between 0 and 2.5 percent and aim to protect lenders from potential losses related to excessive credit growth, a measure of particular resonance in Ireland where the banking sector required the euro zone’s costliest state bailout following a 2008 property crash.

Reporting by Padraic Halpin, editing by Louise Heavens

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