Banca Naţională a României

The ordinary meeting of the National Committee for Financial Stability (NCFS) took place on 26 November 2015.

The meeting was attended by Mr. Mugur Isărescu – Governor of the National Bank of Romania and NCFS President, Ms. Anca Dana Dragu – Minister of Public Finance, Mr. Mișu Negrițoiu – President of the Financial Supervisory Authority (FSA) and Mr. Eugen Dijmărescu – Director of the Bank Deposit Guarantee Fund.

According to its prerogatives to adopt recommendations and advisory opinions respectively, during the transitional period until the interinstitutional structure coordinating macroprudential supervision of the national financial system becomes operational (Art. 1261 of Government Emergency Ordinance No. 99/2006 on credit institutions and capital adequacy, as approved, amended and supplemented by Law No. 227/2007, as subsequently amended and supplemented), the Committee assessed the macroprudential objectives and instruments previously assumed by the NBR and the FSA. Particular attention was attached to capital buffers that may be imposed on credit institutions, apart from the own funds requirements, in order to strengthen financial system resilience and mitigate any negative effects on financial system stability and economic stability.

To this end, the NCFS members adopted NCFS Recommendation No. 1/26.11.2015 whereby the NBR, in its capacity as competent authority, is recommended to require credit institutions to implement capital buffers as of 1 January 2016, as follows: 0 (zero) percent for the countercyclical capital buffer, 0.625 percent for the capital conservation buffer, whereas for the other buffers the procedures will be followed in line with regulations in force.

In view of the obligation deriving from Directive 2013/36/EU of the European Parliament and of the Council on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, transposed into the national legislation via NBR Regulation No. 5/2013 on prudential requirements for credit institutions and Government Emergency Ordinance No. 99 of 6 December 2006 on credit institutions and capital adequacy, to activate the capital conservation buffer and the countercyclical capital buffer as of 1 January 2016, a recommendation was made to implement minimum levels of these buffers, as follows:

1. The capital conservation buffer will be phased in between 1 January 2016 and 1 January 2019 in equal increments of 0.625 percent per annum of the credit institution’s total risk exposure amount, until it reaches the required 2.5 percent level, as follows:
   • As of 1 January 2016 – 0.625 percent;
   • As of 1 January 2017 – 1.25 percent;
   • As of 1 January 2018 – 1.875 percent;
   • As of 1 January 2019 – 2.5 percent.
2. The countercyclical capital buffer will not be imposed on credit institutions at a rate of over 0 percent starting 1 January 2016.

The current capital requirements for credit institutions concerning the minimum required Common Equity Tier 1 capital ratio of 4.5 percent of the credit institution’s total risk exposure amount will change following the implementation of these buffers, as follows:

• As of 1 January 2016 – 5.125 percent;
• As of 1 January 2017 – 5.75 percent;
• As of 1 January 2018 – 6.375 percent;
• As of 1 January 2019 – 7 percent.

The use of such macroprudential instruments is not expected to imply any capital contribution, at this point in time, for credit institutions in Romania, considering the high level of capital reserves in place, as revealed by the reported capital adequacy indicators. In addition, the assessments showed that imposing capital buffers will not have a detrimental impact on the sustainable resumption of lending to the real sector.

The NCFS members will periodically issue recommendations on the implementation of capital buffers in Romania.