The purpose of Pillar 3 for Eika Boligkreditt AS is to complement the minimum requirements of Pillar 1 and the supervisory review process of Pillar 2. Pillar 3 is intended to improve market discipline and transparency of information enabling the market, including analysts and investors, to assess the institution's key pieces of information on the scope of application, capital, risk exposures, risk assessment processes, and hence the capital adequacy of the institution.
The public reporting requirements in Pillar 3 are particularly important when the banks and institutions may freely use their own models and methods to calculate their capital requirements.
The capital requirement and the capital targets are assessed on the basis of the international capital requirement regulations Basel II, as laid down in the Financial Institutions Act and the regulations relating to capital requirements.
Pursuant to section 13, subsection 6 of the Financial Institutions Act the requirement is that a financial institution shall at all times have sufficient regulatory capital given the risk related to and the scope of the operations undertaken by the institution. This shall be assessed in both the long and the short term.
The capital adequacy shall therefore be higher than the minimum requirement of 8%, which is further determined by the capital requirement regulations. The Norwegian FSA will assess both EBK's capital target and the documentation of the assessments on which its board has based its conclusions.