June 26, 2017

IMF published its staff report and selected issues report in the context of the 2017 Article IV consultation with Czech Republic. The staff report highlights that a number of macro- and micro-prudential measures had been taken, including tighter capital requirements, off- and onsite supervision, loan-to-value (LTV) recommendations, and the consumer credit act. The selected issues report examines the impact of removing the exchange rate floor on the monetary policy.

The staff report reveals that the banking system is liquid and profitable. aggregate capital ratios are above requirements. Leverage is low and liquidity high. Banks are funded mainly from deposits. Moreover, aggregate levels of non-performing loans are low and decreasing as nominal demand picks up, while provisioning is in line with that of peers. The authorities broadly shared staff’s assessment of risks and the need for additional macro-prudential measures. The Czech National Bank has implemented a number of prudential measures to manage financial risks. Capital requirements on banks are relatively high, the capital conservation buffer has been fully implemented, and the counter cyclical capital buffer has been set to 0.5% of the risk-weighted exposure amounts (from 2017). Buffers have been activated for five systemically important banks. The authorities are moving toward implementation of the Bank Recovery and Resolution Directive (BRRD). The framework is intended to facilitate orderly resolutions of financial institution while cushioning tax payers from losses. The BRRD was transposed into Czech law in 2016; as the designated resolution authority, the CNB is working to develop resolution plans and calibrate appropriate levels of eligible liabilities for each institution (MREL). An important input to this work will be the decision at the European level about MREL targets. Given that the banking system is dominated by subsidiaries of parents from the euro area, a key issue in the development of resolution plans yet to be agreed by the Single Resolution Board and national authorities is the choice between single or multiple points of entry when resolving banks.

 

Related Links

Staff Report (PDF)

Selected Issues Report (PDF)

Keywords: Europe, Czech Republic, IMF, Article IV, Basel III, Banking, BRRD


Related Articles
News

EC Amends Regulation Supplementing Solvency II Directive

EC published the Delegated Regulation (EU) 2019/981 that amends the Regulation (EU) 2015/35, which supplements Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance.

June 18, 2019 WebPage Regulatory News
News

IOSCO Report Examines Application of International Cyber Standards

IOSCO published a final report that examines the application of the three internationally recognized cyber standards and frameworks by IOSCO member jurisdictions.

June 18, 2019 WebPage Regulatory News
News

PRA Launches 2019 Stress Test Exercise for Life and General Insurers

PRA has launched the biennial insurance stress test and is asking the largest regulated life and general insurers to provide information about the impact of a range of stress tests on their business.

June 18, 2019 WebPage Regulatory News
News

PRA Finalizes Reporting Amendments to Pillar 2 Liquidity Framework

PRA published the final Policy Statement PS13/19 on regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework for banks in UK.

June 17, 2019 WebPage Regulatory News
News

FSB Assesses Implementation of Compensation Standards and Principles

FSB published the sixth progress report on the implementation of its principles and standards for sound compensation practices in financial institutions.

June 17, 2019 WebPage Regulatory News
News

IMF Publishes Reports on 2019 Article IV Consultation with Ireland

IMF published its staff report and selected issues report under the 2019 Article IV consultation with Ireland.

June 17, 2019 WebPage Regulatory News
News

EBA Updates Data on Deposit Guarantee Schemes in EU

EBA published the 2018 data on two key concepts in the Deposit Guarantee Schemes Directive (DGSD)—namely, available financial means and covered deposits.

June 17, 2019 WebPage Regulatory News
News

SNB Updates Form for Reporting Solvency Risk of Counterparties

SNB published the survey (Form Release 5.01) and related documentation for reporting solvency risk of counterparties in the interbank sector (ARIS).

June 17, 2019 WebPage Regulatory News
News

ISDA Studies Variation in Global Implementation of Margin Requirements

ISDA published a paper that highlights the main areas of difference in the implementation of margin requirements for non-cleared derivatives across jurisdictions and makes recommendations on how to resolve these variations.

June 17, 2019 WebPage Regulatory News
News

US Agencies Finalize Rule to Streamline Reporting for Small Banks

US Agencies (FDIC, FED, and OCC) adopted a final rule to streamline the regulatory reporting requirements for small institutions.

June 17, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3265