BCB Maintains Countercyclical Capital Buffer for Banks at 0%
At its meeting in November 2020, the Financial Stability Committee of BCB decided to keep the countercyclical capital buffer for Brazil (CCyB or ACCPBrasil) at 0%. The Committee considers it appropriate to maintain the buffer at 0% throughout 2021. The Committee will meet again on March 02, 2021. In addition, BCB is consulting on a set of rules that seek to harmonize the prudential treatment applicable to payment transactions, whether carried out by a payment institution or by a financial institution. The proposal provides for the gradual implementation of the new rules, with full adoption in January 2025. The consultation is open until January 26, 2021.
According to the proposal, the capital requirement for payment activities will have the same methodology, regardless of whether it is determined by a Type 1, Type 2, or Type 3 conglomerate. This methodology consists of applying a percentage to the average volumes of payment transactions carried out in the last 12 months. The only exception is Type 1 institutions in Segment 1. For the Type 2 conglomerate, the proposal also redefines the concept of regulatory capital by replacing the current definition of adjusted shareholders' equity by profit and loss accounts with the new concept of Payment Institution Reference Equity (PRIP). The rules for calculating the PRIP will ensure greater quality for the capital of a payment institution, to allow the most effective fulfillment of its essential function, which is to absorb unexpected losses. Additionally, the Type 2 conglomerate will now have a capital requirement for exposures arising from activities subject to credit or operational risk. Such requirement will be calculated according to the same methodology applicable to the institution included in Segment 5 (S5).
Related Links (in Portuguese)
Comment Due Date: January 26, 2021
Keywords: Americas, Brazil, Banking, PMI, CCyB, ACCP, Regulatory Capital, Basel, BCB
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