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OSLO, Dec 15 (Reuters) - 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)