BNB Sets Countercyclical Buffer at 1% for Third Quarter of 2020

By Regulatory News

June 25, 2019

Regulatory Capital, Basel III

BNB has set the level of countercyclical capital buffer (CCyB) applicable to credit risk exposures in the Republic of Bulgaria at the rate of 1% for the third quarter of 2020. The level of the CCyB applicable to credit risk exposures in the Republic of Bulgaria remains 0% until the end of the third quarter of 2019, 0.5% for the fourth quarter of 2019 and the first quarter of 2020 and 1% for the period April-June 2020. The Governing Council of BNB will make a decision on the level of buffer applicable in the fourth quarter of 2020 in September 2019.

Trends from previous quarters for increased activity on the credit market in the country remain. In times of increased lending, BNB states that it is possible to start gradually accumulating cyclical risks that would occur if the ability of borrowers to service obligations weakened in the event of a possible downturn in economic activity and an increase in risk premiums included in interest rates. Maintaining an anti-cyclical capital buffer in a period of favorable economic conditions may contribute to preserving and further enhancing the capital position of the banking system, thus enhancing the sustainability of credit institutions in future credit risk realization.

Related Links (in Bulgarian)

Keywords: Europe, EU, Bulgaria, Banking, CCyB, Regulatory Capital, Basel III, BNB

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