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Belgium changes macroprudential capital buffers

EUROZONE
  • The National Bank of Belgium has reactivated the countercyclical capital buffer (CCyB). This will be done in two stages: To a rate of 0.5% on 1 April 2024 and to a rate of 1.0% from 1 October 2024.
  • Also from 1 April 2024, the sectoral systemic risk buffer for Belgian mortgage loans will be lowered from its current level of 9% to 6%, effective 1 April 2024.
  • The NBB reports that "The two macroprudential capital buffers will therefore rise from a current combined level of €2 billion to €2.5 billion on 1 April 2024 and to €3.6 billion on 1 October 2024."
  • First this is not a big surprise as the NBB put out a press release on 30 June stating that it was considering these moves.
  • Second, this isn't a big change in the total capital that banks need to change - so shouldn't have a big macro impact. But it may impact some single names differently (which is outside the scope of our coverage).
  • The justification for these changes from the NBB is that "The NBB continues to believe that banks remain potentially exposed to unexpected losses, whereas their provisions for expected credit losses have dropped back to pre-pandemic levels. Reactivating the CCyB will heighten the banking sector’s resilience to potentially higher-than-expected losses."
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