CNB Bank Board decided to keep the countercyclical capital buffer (CCyB) rate for exposures located in the Czech Republic unchanged at 0.50%. CNB published Provision (I/2021) on setting the CCyB rate, specifying that the rate has been set pursuant to Article 92(3) of the Capital Requirements Regulation (575/2013). The Provision also mentions that banks and credit unions shall apply the CCyB rate for calculating the combined buffer requirement as of April 01, 2022. The Provision came into effect on March 05, 2021.
CNB had set the CCyB rate at a non-zero level for the first time at the end of 2015. The latest change in the rate occurred on June 18, 2020, when the Bank Board decided to lower the rate to 0.50%, with effect from July 01, 2020. Given the relatively slow build-up of new risks in the banking sector’s balance sheet and given the continuing limited materialization of risks taken on in the past, CNB Bank Board expects a gradual rise in the CCyB rate to the level covering the usual level of risks. By contrast, should the economic situation worsen, CNB remains ready to release the buffer immediately and fully, to support banks’ ability to provide credit to non-financial corporations and households without interruption. The decisive signal for such a step would be cyclical risks that were accepted earlier materializing via credit losses and an increase in risk- weights for internal ratings-based loan portfolios.
Effective Date: March 05, 2021
Keywords: Europe, Czech Republic, Banking, CCyB, Credit Risk, Macro-Prudential Policy, Systemic Risk, Regulatory Capital, Basel, CRR, CNB
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