Norway raises countercyclical bank buffer

Sparebank 1 Nord-Norge

13/12/2018 09:00

OSLO, Dec 13 (Reuters) - Norway will increase its
countercyclical capital buffer requirement for banks to 2.5
percent from 2.0 percent, the finance ministry said in a
statement on Thursday, while adding the new requirement must be
met by the end of 2019.    
    The decision was in line with a recommendation from the
central bank.
    "Norges Bank said that household debt ratios are high and
rising, and that property prices have risen rapidly for many
years and are now at historically high levels. As a result,
financial imbalances have built up," the ministry said.
    In December 2016, the ministry decided that banks should
hold a countercyclical buffer of 2.0 percent by the end of 2017,
an increase from 1.5 percent.
    The buffer, set by the ministry, aims to force banks to
accumulate extra capital during boom periods on top of capital
requirements set through other regulations.
    The buffer can be unwound during downturns, enabling banks
to continue lending and hence soften the impact of a recession.
    Leading Norwegian banks include among others DNB  DNB.OL ,
SR Bank  SRBANK.OL , Sparebank 1 SMN  MING.OL , Sparebanken Vest
 SVEG.OL  and Sparebank 1 Nord-Norge  NONG.OL .

 (Reporting by Oslo newsroom)
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70; Reuters
Messaging: terje.solsvik.thomsonreuters.com@reuters.net))