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The Bank of Spain sets the capital buffer for 2026 at 1%

the profit made in their corresponding balance sheets.

The regulator explained on Thursday that the percentage will not be determined in the short term, but will be done gradual until 2026. In figures, the cost to Spanish credit institutions will total 7,500 million euros in capital, the equivalent of that 1% percentage compared to the balance sheet data presented at the end of 2023.

Similarly, the Bank of Spain has begun the process of revision of the framework for establishing this capital buffer, so that it can be activated at a time when risks are moderate, neither very high nor very low. This is the situation that the Bank of Spain is currently signaling for the Spanish economy, as revealed on Thursday.

'Compared to a previous situation in which we only activated the countercyclical capital buffer when we determined that the risks were high, we are now moving to a framework in which we activate the buffer when the risks are high. the risks are moderatethat is, standard, not too high and not too low,” explained the Governor of the Bank of Spain, Pablo Hernández de Cos. The optimal level of the CCA for an average level of risk has therefore been set by the organization at 1%, a limit that will be implemented gradually and in accordance with the way the balance sheets of Spanish financial entities evolve.

First, the Bank of Spain is considering one first level of the capital buffer in the 0.5% starting in the fourth quarter of 2024, and already applicable on October 1, 2025. The following year, the agency will re-examine the level of risks in the economy and, if they remain moderate, the capital buffer will be increased again by another half percentage point, so that from December 1 October 2026 is fixed in the 1%.

“Almost zero” impact on Spanish banks: “They will be able to take advantage of the benefits”

The still Governor of the Bank of Spain, Hernández de Cosexplained on Thursday that the pace of gradual implementation will allow the accumulation of the mattress “almost zero” impact in the Spanish financial sector. Likewise, he reiterated that financial entities can “use this year's profits, next year's profits and 2026's profits” to provide this capital buffer. That is to say, the impact of that 1% on Spanish banks will be corrected by the figures already presented by the entities in the first quarter of the year, and by what who hope to win during the rest of the year and in the years to come.

In case the risks of the Spanish economy differentthe Bank of Spain could make the decision view or even reverse this plan. “The determination of a positive percentage of the CCA when the cyclical systemic risks be at a standard level, the resistance of the banking sector unfavorable cyclical phasesand thus contributes to facilitating a more stable provision of bank financing to the real economy throughout the cycle,” the Bank of Spain explained on Thursday.

“It is a very flexible instrument, and that flexibility is absolutely essential to make it work well,” Hernández de Cos explains, recalling that “the risks develop in a very unexpected way.” He has therefore left the door open for a revision of the capital buffer between now and 2026, depending on the evolution of Spanish banks and the macro situation.

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