The Bank of Spain said on Thursday it plans to introduce a 0.5% countercyclical capital buffer for Spanish banks to cover potential systemic risks in the fourth quarter of this year and activate it from from October 1, 2025.
The countercyclical cushion in Spain is currently set at 0%.
It aims to mitigate or prevent cyclical risks caused by excessive growth in aggregate credit by requiring lenders to build up insurance reserves during periods of strong growth, reserves which would then be available in the event of a downturn.
Until now, the safety buffer was only activated when risks were high, but it will now be applied when risks are at an intermediate level, as is currently the case, the governor of the Republic said on Thursday. Bank of Spain, Pablo Hernandez de Cos, to the press.
“Next year, if the circumstances remain the same, it will be increased by another half point,” Mr. de Cos said.
The buffer would be increased to 1% from the fourth quarter of 2025, to be applied from October 1, 2026. “This is the decision we are making today with the information we have today,” added Mr. De Cos.
If we consider the current overall capital of Spanish banks, 0.5% would represent 3.75 billion euros, estimated Angel Estrada, head of financial stability at the central bank. (Reporting by Jesús Aguado; Editing by Emma Pinedo, editing by Inti Landauro)
