June 11, 2019 / 11:53 AM / 4 months ago

UPDATE 2-Slovak central bank hikes capital buffer rate again

(Adds bank comment)

BRATISLAVA, June 11 (Reuters) - The Slovak central bank has raised its countercyclical capital buffer for banks by half a percentage point to 2.00%, valid from August 2020, officials said on Tuesday, taking a further step to increase the resilience of the banking sector and curb fast lending.

Slovakia is among a handful of European countries applying the extra charge on banks as it seeks to hold down risks from high loan growth, especially in a hot housing market.

Neighbouring Czech Republic already has a similar rate level coming into effect while Germany’s Financial Stability Board at the end of May suggested a buffer of 0.25% for its banks.

Lending in Slovakia, the first euro zone country to apply the buffer requirement, has been growing at or near double-digit levels.

Vladimir Dvoracek, head of the central bank’s financial oversight department, said cyclical risks remained and that despite a certain slowdown in household loan growth, the lending rise remained “excessive”.

“The Slovak bank’s capital adequacy is very good, over 18%, so we can say that banks already hold certain buffers voluntarily,” he added.

The countercyclical buffer rate is already due to rise to 1.50% from 1.25% from Aug. 1 this year.

The latest decision is subject to European Central Bank consultation under which the ECB assesses the rate and can, if needed, apply a higher requirement.

Slovakia’s banks, including CSOB, Postova Banka, Slovenska Sporitelna, Tatra Banka and VUB , are largely foreign-owned and have avoided troubles seen by other banks in Europe in the decade after the global financial crisis.

“Our capital adequacy at the end of 2020 is seen at a level two percentage points higher than the level required by the regulators for our bank. That means the 0.5-point raise as of August 2020 will leave us with enough room to finance our clients,” said Slovenska Sporitelna, the country’s biggest bank.

Reporting by Tatiana Jancarikova; Writing by Jason Hovet; Editing by Andrew Cawthorne and Gabrielle Tétrault-Farber

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below