AFL Group Marks Major Regulatory Change with P2R Removal

Author: Dylan Bailey Updated: 07-09-2025 03:57 AM

AFL Group's Significant Regulatory Update

AFL Group recently announced an important change regarding its banking operations. The removal of the Pillar 2 Requirement (P2R) signals a positive shift for the institution, strengthening its stability and capacity to support local authorities.

Pillar 2 Requirement Explained

The Pillar 2 Requirement is an essential part of the regulatory framework that determines the capital demands on banks relative to their risk profiles. In simple terms, the P2R was an additional capital requirement imposed on banks by regulators as part of the supervisory review process. This requirement evaluated risk aspects beyond those considered under the standard capital requirements.

ACPR's Decision

On June 20, 2025, the French Prudential Supervision and Resolution Authority (ACPR) notified AFL Group's parent company about the termination of this requirement, effective January 1, 2025. This was based on a comprehensive review of AFL Group's risk profile, which indicated that the extra capital demand was no longer necessary.

Implications for AFL Group

With the removal of the P2R, AFL Group is now obliged to maintain a capital adequacy ratio of at least 8% under standard Pillar 1 requirements, in addition to a Common Equity Tier 1 (CET1) capital conservation buffer of 2.5%. Moreover, it has to adhere to the countercyclical capital buffer established for all French institutions, which currently stands at 1%.

Solid Financial Standing

AFL Group's financial health is highlighted by its impressive capital adequacy ratio of 62.75% as of December 31, 2024. This positions the organization exceptionally well in terms of stability and capacity for growth, ensuring it can support its shareholders effectively.

The Vision for Local Authorities

AFL Group prides itself on being the only French bank fully owned by local authorities. This unique model allows local authorities to leverage their investments effectively. By becoming shareholders, they can benefit from tailored financing solutions that cater to their specific needs. Since launching in 2015, AFL Group has disbursed nearly €11.5 billion in loans, with €2 billion provided in 2024 alone.

A Commitment to Sustainable Finance

AFL Group emphasizes responsible finance, aiming to empower local authorities to act effectively while addressing current and future challenges faced by citizens. This commitment to sustainable financial practices blends innovation and accountability, ensuring community needs are met.

Future Outlook

The removal of the P2R requirement affirms AFL Group's robust management framework. As Yves Millardet, Chairman of the Management Board of AFL, noted, this regulatory decision will support continued sustainable growth and development, crucial for aiding French local authorities.

Frequently Asked Questions

What does the removal of the Pillar 2 Requirement mean for AFL Group?

This removal indicates that AFL Group no longer needs to maintain the additional capital reserves previously required, enhancing its financial flexibility.

When will the P2R be officially removed?

The Pillar 2 Requirement will be officially terminated effective January 1, 2025.

What is AFL Group's capital adequacy ratio?

As of December 31, 2024, AFL Group's capital adequacy ratio was a remarkable 62.75%.

How does AFL Group support local authorities?

AFL Group provides tailored financial solutions, granting loans and support consistent with the needs of local authorities to foster sustainable investments.

What is the vision of AFL Group?

The group's vision is to embody responsible finance, empowering local authorities to address both present and future citizen needs effectively.

About The Author

My name is Dylan Bailey, and I am 28 years old. I am an author and an expert on the stock market who specializes in publicly traded companies. Early fascination with the stock market inspired me to seek a finance degree and then delve deeply into the world of stocks. I have developed over the years my abilities to spot investment prospects, assess business performance, and analyze market trends.

My books and articles try to help regular investors understand the nuances of the stock market. Anyone can, in my opinion, make wise investment choices and succeed financially if they have the correct information and resources. In my writing, I combine in-depth research with practical insights and advice that can be put into action. This is done with the intention of assisting readers in navigating the constantly shifting landscape of publicly traded companies.

In addition to writing, I also host webinars and workshops, where I give presentations and share my knowledge with a wider audience. I also write for top financial journals and show up as a guest analyst on financial news shows. I like to travel, spend time with my family, and keep active by playing different sports when I'm not buried in market research.

My goal is to enable people to choose wisely and consciously in their investments, so taking charge of their financial futures. By my work, I hope to create a community of informed and self-assured investors prepared to take advantage of the chances presented by the stock market.

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