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Norway hikes countercyclical buffer for banks

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Norway hikes countercyclical buffer for banks

Norway's central bank and finance ministry moved to hike the countercyclical buffer requirement for banks to 2.5% from 2%, effective Dec. 31, 2019.

The increase comes in light of increasing financial systems vulnerabilities over the past year in the country with soaring commercial property prices, according to the 2018 Financial Stability report. The Norges Bank also noted that report added that the banks would have to draw down some of the other buffers as well to maintain lending in case of an economic downturn.

The central bank advises the finance ministry on the buffer quarterly.

In 2019, certain EU regulations would reduce capital requirements to meet the same risk-weighted capital ratio level, allowing banks to sustain an increase in the buffer rate without making drastic adjustments, the regulator said.