CNB decided to leave the systemic risk buffer rates for the five most systemically important banks unchanged from January 01, 2021 onward. The rates will thus remain at 3% for Česká spořitelna, ČSOB, and Komerční banka; 2% for UniCredit Bank; and 1% for Raiffeisenbank. After transposition of the Capital Requirements Directive (CRD) V into the national legislation, CNB will start to use the buffer for other systemically important institutions (O-SIIs), instead of the systemic risk buffer to mitigate risks connected with the systemic importance of banks. A systemic risk buffer is expressed as a percentage of the overall risk exposure of a bank and must consist of the Common Equity Tier 1 capital of a bank.
In addition, the CNB Board decided to leave the countercyclical capital buffer (CCyB) rate for exposures in the Czech Republic at 0.50%. Earlier, on June 18, 2020, the CNB Board had decided to lower the CCyB to 0.50%, with effect from July 01, 2020. Banks and credit unions shall apply this rate for calculating the combined buffer requirement from October 01, 2021. Obliged institutions are required to create this buffer on the basis of the regulator’s instructions in periods of excessive growth in lending. Excessive lending growth usually increases financial imbalances and leads to a rise in systemic risk. By contrast, at times of falling economic activity, accompanied by rising credit losses, this buffer should be released so that non-financial corporations and households continue to have access to loans without excessively tight conditions. The CCyB is set in the Czech Republic by the Czech National Bank on a quarterly basis.
Keywords: Europe, Czech Republic, Banking, CCyB, Systemic Risk Buffer, CRD5, Systemic Risk, Regulatory Capital, Basel, Macro-Prudential Policy, CNB
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.
Previous ArticleHKMA Revises Regulatory Framework for Supervision of Liquidity Risk
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.