National Bank of Belgium confirms previous decisions on the countercyclical capital buffer for credit institutions
In accordance with the applicable regulations, the National Bank is required to formally review the appropriate level of the countercyclical capital buffer (CCyB) on a quarterly basis. This buffer serves as a temporary additional capital reserve, providing banks with the necessary leeway to absorb credit losses in the event of a sharp increase in loan defaults. The National Bank is leaving its policy on this matter unchanged and will continue to implement the decisions taken in the third quarter of last year.
As stated in the press release of 31 August 2023, it was decided in the third quarter of last year to improve the resilience of Belgian banks through activation of the countercyclical capital buffer. It was also decided to reduce the sectoral systemic risk buffer for Belgian mortgage loans. Indeed, satisfactory compliance with supervisory expectations for Belgian mortgage loans had resulted in a lowering of the systemic risk associated with this portfolio.
In the event of a crisis, these macroprudential buffers can be used by banks to absorb credit losses and provide financial support to clients.
Larger macroprudential capital buffers
By means of the current quarter’s decision, the National Bank confirms that activation of the countercyclical capital buffer, on 1 October, will lead to the effective creation of a buffer of around €1.1 billion on 1 April 2024 (CCyB rate of 0.5%) and of approximately €2.3 billion on 1 October 2024 (CCyB rate of 1%).
The sectoral systemic risk buffer for Belgian mortgage loans will be lowered from its current level of 9% to 6% on 1 April 2024. The total amount of this buffer will thus fall from around €2 billion to approximately €1.3 billion.
The combined total of these two macroprudential capital buffers will thus rise from €2 billion to €2.5 billion on 1 April 2024 and to €3.6 billion on 1 October 2024.