The European Central Bank has notified Societe Generale group of the level of its Pillar 2 Requirement (P2R), which will apply from 1 January 2027. The requirement stands at 2.37%, including at least 1.39% in the form of Common Equity Tier 1 (CET1) capital.
The P2R includes a requirement of 0.12% regarding Pillar 2 prudential expectations on calendar provisioning for non-performing loans granted before 26 April 2019. A Pillar 2 requirement is a bank-specific capital requirement that supplements the minimum Pillar 1 requirement where the latter underestimates or does not cover certain risks.
MINIMUM RATIOS INCLUDING COMBINED BUFFERS
Taking the combined regulatory buffers into account, the minimum CET1 ratio applicable to the group on a consolidated basis will be 10.41% from 1 January 2027. That figure includes 0.86% for countercyclical buffers and 1.125% for the Other systemically important institutions buffer.
The minimum Tier 1 ratio will be 12.33% and the minimum Total Capital ratio 14.89%. The ECB also notified a Pillar 2 requirement on the leverage ratio (P2R-LR), and as a consequence the minimum leverage ratio requirement is 3.6%.
HOW THE REQUIREMENTS COMPARE WITH 2026
The ECB had previously notified the bank of a P2R applying from 1 January 2026. That requirement was 2.36%, with at least 1.38% to be held as CET1, so the 2027 level is slightly higher on both measures.
For 2026 the minimum consolidated CET1 requirement was 10.26%, including a 0.85% countercyclical buffer, with 12.19% for Tier 1 and 14.74% for Total Capital. The ECB revised its method for setting Pillar 2 requirements for its 2026 supervisory review cycle, and requirements from that cycle take effect on 1 January 2027.
HEADROOM ABOVE THE REQUIREMENTS
Societe Generale reported a CET1 ratio of 13.2% as of 30 June 2026. The bank said this gives it a comfortable pro forma buffer of around 280 basis points above regulatory requirements.
The group's leverage ratio stood at 4.3% on the same date, well above the 3.6% requirement. Separately, the bank said in April that its combined buffer requirement would rise by 25 basis points in two phases: 12.5 basis points effective 1 January 2027 and a further 12.5 basis points effective 1 January 2028.
GROUP PROFILE AND BUSINESS LINES
Societe Generale describes itself as a top-tier European bank with around 110,000 employees serving 27 million clients in 58 countries. It has been supporting economic development for over 160 years, and operates in three complementary business areas that integrate ESG offerings for all clients.
French Retail, Private Banking and Insurance comprises the retail bank SG, BoursoBank, premium private banking and an insurance franchise. Global Banking and Investor Solutions is a wholesale bank with global leadership in equity derivatives and structured finance. Mobility, International Retail Banking and Financial Services includes universal banks in the Czech Republic, Romania and several African countries, as well as Ayvens.
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