OSLO Dec 15 Norway will increase its
countercyclical capital buffer requirement for banks to 2.0
percent from 1.5 percent, the finance ministry said in a
statement on Thursday.
The decision was in line with a recommendation from the
central bank, it added.
"In the Norwegian economy, high house price inflation and a
continued rise in household debt ratios are signs that financial
imbalances are building up further. House prices have risen
sharply in recent months. High house prices could lead to
increased household debt, and makes households more vulnerable,"
the ministry said.
The buffer, set by the ministry, forces banks to accumulate
extra capital in periods of strong earnings on top of capital
requirements set through other regulations.
The buffer can be unwound during downturns, enabling banks
to continue lending and hence soften the impact of a recession.
Leading Norwegian banks include among others DNB,
SR Bank, Sparebank 1 SMN, Sparebanken Vest
and Sparebank 1 Nord-Norge.
(Reporting by Terje Solsvik)