ESRB updated the list of countercyclical capital buffer (CCyB) rates applicable in countries in the Eurosystem. In light of the COVID-19 outbreak, several countries have announced that they are reducing their countercyclical capital buffer rates. This is the case, for example, in Belgium, Denmark, Germany, Iceland, Ireland, Norway, Sweden, and the United Kingdom. Additionally, ESRB updated the overview of national macro-prudential in the EU and the European Economic Area. The overview covers several national macro-prudential measures, including capital buffers and reciprocation measures, and the active capital-based measures that apply to the systemically important institutions in a member state.
The key CCyB decisions of various national authorities are as follows:
- NBB has decided to preventively release the full countercyclical buffer for credit risk exposures to the Belgian private non-financial sector. Through this release of the countercyclical buffer, NBB is making approximately EUR 1 billion worth of capital buffers available to Belgian banks to cover potential risks.
- Given the anticipated need for credit in the real economy, BaFin intends to lower the countercyclical capital buffer from 0.25% to 0% as of April 01, 2020. This preventive measure will strengthen the German banking sector’s ability to lend. The buffer is to remain at 0% until at least December 31, 2020.
- Central Bank of Ireland announced that countercyclical capital buffer will be reduced from 1% to 0% no later than April 02, 2020.
- BoE announced that the Financial Policy Committee has reduced the countercyclical capital buffer rate for UK to 0% of banks’ exposures to UK borrowers, with immediate effect. The rate had been 1% and had been due to reach 2% by December 2020. The Financial Policy Committee expects to maintain the 0% rate for at least 12 months, so that any subsequent increase would not take effect until March 2022 at the earliest.
- The Danish Government has decided to release the countercyclical capital buffer and cancel the planned increases meant to take effect later. This will help the credit institutions to continue providing an adequate level of lending.
- Countercyclical Capital Buffer
- Press Release by NBB
- Press Release by Bundesbank
- Press Release by Central Bank of Ireland
- BoE Statement
- Overview of National Macro-Prudential Measures (XLSX)
- National Macro-Prudential Framework
Keywords: Europe, EU, Belgium, Denmark, Germany, Ireland, Iceland, Norway, Sweden, UK, Banking, CCyB, Systemic Risk, ESRB, NBB, Central Bank of Ireland, BoE, Bundesbank
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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