The National Committee for Macroprudential Oversight has advised Romania’s National Bank to increase the bank capital requirements from mid-2018 by introducing a systemic risk buffer. This is necessary due to the prospect of rising non-performing loans as a result of higher interest rates and tenser macroeconomic balances, writes local Profit.ro.
The committee includes the managements of the central bank, the Finance Supervisory Authority (ASF) and the Finance Ministry.
Bad loans could start increasing again, after a period of sudden decrease starting 2013, according to the committee. Market interest rates have gone up relatively fast since the beginning of September, as inflation accelerated.
BNR should increase the capital requirements for banks starting June 30, next year, according to the committee’s recommendation. The requirement will be tighter (2% buffer level) for banks that have a bad loan ratio of over 5% and a coverage ratio with provisions below 55%.
The overall NPL ratio in the local banking system reached almost 8% at the end of September whereas the coverage ratio was 59%.