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, the National Bank last year decided to improve the resilience of Belgian banks through activation of the countercyclical capital buffer. It was also decided that the sectoral systemic risk buffer for Belgian mortgage loans would be reduced. 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 a decision in the current quarter, the National Bank confirms that the countercyclical capital buffer, activated on 1 October 2023, and which amounted to €1.2 billion on 1 April 2024 (CCyB rate of 0.5%), will rise to approximately €2.4 billion on 1 October 2024 (CCyB rate of 1%).
The sectoral systemic risk buffer for Belgian mortgage loans has been lowered from 9% to 6% as of 1 April 2024. Consequently, the total amount of this buffer fell from approximately €2 billion to approximately €1.4 billion.
The combined total of these two macroprudential capital buffers will thus rise from €2.6 billion as of 1 April 2024 to €3.8 billion as of 1 October 2024.