CNB Examines Financial Sector Stability, Increases CCyB Rate to 1%
The CNB Board decided to increase the countercyclical capital buffer (CCyB) rate to 1%, with effect from July 01, 2022. The Board also decided to reduce the frequency of the two-week liquidity-providing repo operations for credit institutions to once a week, with effect from May 28, 2021, and to reintroduce the previously applied interest rate mark-up of 0.1 pp. However, a decision was made to keep the recommended loan-to-value (LTV) limit unchanged at 90%, with the option of applying a 5% exemption.
At this time, CNB does not deem it immediately necessary to set debt-to-income (DTI) and debt service-to-income (DSTI) limits or to tighten the other parameters of the existing recommendation on the management of risks associated with the provision of mortgage loans issued in April 2020. CNB regards the high and increasing share of loans with a DTI ratio of over 8% and a DSTI ratio of over 40% as a potential source of systemic risk. Therefore, lenders are advised to ensure that such loans are only provided to applicants that are highly likely to repay without problems. CNB would have to react using macro-prudential policy tools to any further easing of credit standards and taking on of additional risks. During the meeting, the CNB Board also discussed the Spring Financial Stability Report, noting that a significant source of systemic risk in the domestic economy is the repeated reversal of the spiral between debt financing for the purchase of residential real estate and its rapidly rising prices. Despite the pandemic, residential property prices in the Czech Republic have risen and are now about 70% higher than they were at their lowest point at the end of 2013, thus making housing less affordable. This report is the foundation for the decisions regarding macro-prudential policy instruments, which above all include the countercyclical capital buffer (CCyB) of banks and limits on mortgage lending indicators.
Related Links
Keywords: Europe, Czech Republic, Banking, CCyB, Credit Risk, Macro-Prudential Policy, Systemic Risk, Regulatory Capital, Basel, Mortgage Lending, DSTI, DTI, LTV, Financial Stability Report, CNB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FDIC Tech Sprint Aims to Explore Technologies to Reach UnbankedRelated Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
