National Bank adjusts macroprudential capital requirements

The NBB has decided to maintain the countercyclical buffer rate at 0% for exposures in Belgium in the third quarter of 2023. This decision follows a period of uncertainty in 2022 and the first half of 2023, marked by potential energy crises, shifting credit and real estate cycles, and turbulence in the US and Swiss banking sectors. The NBB’s aim during this time was to allow Belgian banks to use their available capital for credit provisions and support the real economy.
However, as uncertainty has decreased and the credit and real estate cycles in Belgium have remained stable, the NBB announced its intention to reactivate the countercyclical capital buffer (CCyB) and lower the sectoral systemic risk buffer for Belgian mortgage loans. This move is driven by the belief that banks remain exposed to unexpected losses despite their provisions for expected credit losses returning to pre-pandemic levels.
The CCyB will be reactivated on 1 October 2023, with a rate of 0.5%, creating a buffer of approximately €1.1 billion by 1 April 2024 and €2.3 billion by 1 October 2024. Additionally, the sectoral systemic risk buffer for Belgian mortgage loans will be reduced from 9% to 6% on 1 April 2024, resulting in a lower buffer of around €1.3 billion.
These adjustments will increase the combined macroprudential capital buffers from €2 billion to €2.5 billion on 1 April 2024 and €3.6 billion on 1 October 2024. The Council of Ministers has already endorsed the NBB’s new regulation on these buffers, and a Royal Decree approving the regulation will be published soon. CCyB decisions are reviewed quarterly in accordance with European regulations and the NBB’s macroprudential powers.