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Slovak central bank leaves counter-cyclical capital buffer for banks at zero
January 26, 2016 / 1:34 PM / 2 years ago

Slovak central bank leaves counter-cyclical capital buffer for banks at zero

PRAGUE, Jan 26 (Reuters) - The Slovak central bank (NBS) voted on Tuesday to leave its countercyclical capital buffer for banks at zero, despite indications in the past months it may raise it.

The countercyclical buffer is an extra capital requirement of up to 2.5 percent of weighted assets that central banks can apply on all banks at times when credit in an economy heats up.

“The NBS board decided to set the countercyclical capital buffer at 0 percent,” the bank said in Tuesday’s release accompanying its quarterly economic outlook.

It gave no details or outlook on when the buffer may be activated. Banks normally have a year to adapt when the requirement is changed.

NBS’ chief of macroprudential policy department said in November that there was a “high chance” the euro zone country’s bank regulator would activate the buffer if loan growth would maintain its quite fast pace.

Several non-euro zone European countries - the Czech Republic, Norway and Sweden - have slapped the extra countercyclical capital buffer on their banking sectors.

Slovak banks survived the global financial crisis without any need for state aid, and banks remain well capitalised.

The five largest Slovak banks face separate, individual extra capital buffers introduced gradually from this year to reflect their systemic importance. (Reporting by Robert Muller; Editing by Jan Lopatka)

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