The new countercyclical capital buffer of banks will be close to 1%

The countercyclical capital buffer that banks must comply with, which is currently 0%, will be set at 1% in the coming weeks as the Bank of Spain understands that placing it as ‘positive neutral’ will allow greater flexibility. supervisor.

Given the excess equity that banks have regarding the regulatory requirements they support, It will not be necessary for entities to accumulate more capital to comply with the new regulations.

The Executive Commission of the Bank of Spain ha haalized, in a first round, the possibility of modify the current countercyclical capital buffer (at 0% and which has never been activated, but which can be raised if circumstances require it) to convert it into a ‘positive neutral’ instrument, so that it can move up or down, depending on market conditions.

In future meetings of this supervisory body, the decision to establish the level that is considered not to influence the flow of credit in the financial sector and the frame that specifies the possible movements of the mattress.

Since the financial crisis, the supervision model of financial entities has established different capital requirements such as method of measuring the solvency of entities based on the different business models and the systemic importance of the banks.

Minimum base

Starting from a minimum base of generic own resources requirements for all banks, others are added specific requirements based on the characteristics and importance of each entitywhich substantially raises the initial minimums.

Besides, the supervisors (as he ECB Like the national central banks) they have the ability to impose other capital surcharges both general for all banks and specific for specific entities if they consider it necessary to guarantee financial stability.

In the case of the countercyclical capital buffer, competition is national and different countries have it active.or, both in the initial version (Germany and France, for example) and in the one that the Bank of Spain wants to implement (Holland and Slovenia).

For months now In the Bank of Spain there is discussion about the possibility that the countercyclical capital buffer stops being a non-releasable reinforcement and becomes oneconsidering that this would allow greater flexibility in its use. This modification requires that the neutral level established is not the current 0%, but rather is placed on positive ground so that it can really move in both directions.

It has not yet been decided what that level will be. The experts of the Bank of Spain must analyze what is the requirement that, under normal conditions of the economy and the financial situation, does not influence the flow of credit to the economy. Everything indicates that the 1% surcharge is an amount that would meet that condition of neutrality.

At the same time that the new bar will be established, the Bank of Spain is evaluating which indicators should be taken into account to calibrate the level at which it should be located at all times.

It is both about macroeconomic variables (credit/GDP gap, production gap, level of employment, prices of certain assets, especially housing, economic growth…) as financial (solvency of the entities, evolution of delinquencies, volume of loans, diversification of the same…).

At an upcoming meeting of the Executive Committee, the package that must be presented to the European Central Bank Yet the Macroprudential Authority Financial Stability Council and? It will undergo public consultation for 20 days before finally being launched.

Knowledgeable sources indicate that The approval will take place before the end of the mandate of the current governor of the Bank of Spain, Pablo Hernández de Cos, on June 11.but it is possible that it will come into force with whoever replaces it.

The requirement of this mattress In principle, it does not have to require financial institutions to make a new capital effort.given that all of them have solvency levels, measured by CET1, much higher than the minimum requested by the supervisory authorities.

That means could see the level of required own resources increased without changing the total level that each of them has and which, supervisors acknowledge, is high, although it is below the average for European banks. This would not have to mean a penalty for listed entities.

In reality, this argument is only partially valid, because The markets have been asking banks to maintain equity levels clearly higher than the minimum required. and not all entities have the same level of excess.

Some unlisted banks would have no problem adjusting. Kutxabankfor example, closed 2023 with a CET1 of 17.66% and Banking Marcha smaller entity and much more specialized in its business model, declared to have a 21.26% solvency ratio. Compliance with the countercyclical buffer would require no real effort for any of them.

Among those listed, the situation is different. Santander has 12.3%; BBVA12.67%; CaixaBank12.4%; Sabadell13.21%; Bankinter12.3%, and Unicaja, 14.7%. What each of them exceeds the minimum is not known because not all of them make it public, but The truth is that some may be less loose than others.

In any case, Those who, due to investor demands, must rebuild their levels will have plenty of time to do so, since they will be able to have up to three income statements to achieve this.

And also in relatively positive circumstances, since both the quota to the national deposit guarantee fund and the single European resolution fund have disappeared in this year for having reached the levels that had been set, which will release mandatory costs until now.

If the mattress begins to be required next Junethe banks have a full year to cover it, which means that they will have the results obtained in 2024 and those of 2025 to withdraw the amount they need from their accounts.

The Bank of Spain contemplates the possibility of split the mattress requirement into two momentsthe year after it is launched (in June 2025 if that is the date) and at the beginning of the next year, that is, in 2026, so they could also partially use the accounts from that year.

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