Featured Product

    NBB Sets Countercyclical Buffer Rate at 0.5% in Belgium

    June 28, 2019

    NBB announced its plans to increase the countercyclical buffer (CCyB) rate for credit risk exposures to the Belgian private non-financial sector from 0% to 0.5% for the third quarter of 2019. This decision is subject to a one-year implementation period, which means that the CCyB rate of 0.5% will become binding from July 01, 2020.

    CCyB is a temporary buffer that is built during the upward phase of the credit cycle to ensure sufficient absorption capacity for banks to have sufficient margin to cover credit losses during the downward phase of the cycle. The activation of CCyB by NBB is purely preventive, in line with the principles of the macro-prudential policy. In view of the acceleration of the Belgian credit cycle for the private non-financial sector, a precautionary and gradual buildup of CCyB is justified to ensure sufficient resilience in the Belgian banking sector, to secure the necessary absorption capacity for potential credit losses and to safeguard the continuity of credit supply to the Belgian economy going forward. These buffers will be immediately released in the event of a financial shock. Should cyclical systemic risks decrease and the credit cycle turn, these additional buffer requirements will be relaxed toward a 0% neutral level, commensurate with the cycle.

    The measure entails the buildup of an additional (countercyclical) buffer of approximately EUR 1 billion for the Belgian banking sector. Given the current solvency position of Belgian banks and the imposition of a relatively limited 0.5 % buffer rate, this measure should not disrupt credit pricing or credit availability to the Belgian economy. NBB has adopted this measure as a precaution in light of an accelerating credit cycle. However, NBB is also taking due account of the current economic uncertainty. In this context, NBB stands ready to withdraw the measure if a significantly negative and persistent shock were to occur during its phase-in period, to avoid any procyclical effects of the measure.

     

    Related Links

    Keywords: Europe, Belgium, Banking, CCyB, Systemic Risk, Credit Risk, Macro-Prudential Policy, NBB

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582