Recommendations

NCMO Recommendation No. R/2/2020
amending the strategy regarding the implementation of the International Financial Reporting Standards (IFRS) by non-bank financial institutions (NBFIs) as a basis of accounting and for preparing individual financial statements

Having regard to:

  • Art. 3 para. (1) let. b) of Law No. 12/2017 on the macroprudential oversight of the national financial system,
  • the recommendation in the International Monetary Fund’s document entitled “Romania: Financial Sector Assessment Program”, published on 8 June 2018, on ensuring tighter provisioning requirements for the non-bank financial institutions (NBFIs) sector, similar to those applicable to credit institutions, pursuant to IFRS 9 ‘Financial instruments’,
  • NCMO Decision No. D/9/24.09.2018, whereby the action plan to implement the FSAP recommendations targeting the macroprudential policy and systemic risk was approved,
  • NCMO Recommendation No. R/2/2019 on the strategy regarding the implementation of the International Financial Reporting Standards (IFRS) by non-bank financial institutions (NBFIs) as a basis of accounting and for preparing individual financial statements,

Whereas:

  • Amid the COVID-19 pandemic crisis, it is necessary to adopt measures with a view to supporting non-bank financial institutions to use the existing resources to channel the efforts for conducting operational activities,

Pursuant to:

  • Art. 3 para. (1) let. e) and Art. 4 para. (1) let. a) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

The National Bank of Romania is recommended to amend, in compliance with the applicable legal provisions, the regulatory framework necessary for the full implementation of IFRS by non-bank financial institutions (NBFIs) entered in the General Register, as a basis of accounting and for preparing individual financial statements, so that the plan to implement IFRS by NBFIs, as set forth in NCMO Recommendation No. R/2/2019, be extended by one year, and the intermediate steps be accordingly postponed, as follows:

  • from 2019 to 2022, the NBFIs entered in the General Register shall prepare, solely for information purposes, a set of IFRS-compliant individual annual financial statements, by restatement of items in the financial statements drawn up consistent with the national regulations according to European directives;
  • starting 1 January 2023, the NBFIs entered in the General Register shall implement the IFRS and use only these standards as a basis of accounting and for preparing individual annual financial statements; starting 2023, individual financial statements shall no longer be prepared consistent with the national regulations according to European directives;
  • the transitory regime by using off-balance sheet accounting to affect the own funds calculated by the NBFIs entered in the Special Register, i.e. decreasing them by the additional allowances for expected credit loss following the shift to IFRS 9, shall be put in place in the period from 1 January 2021 to 31 December 2022. Furthermore, the National Bank of Romania is recommended to take the measures deemed appropriate in order to avoid the enforcement of sanctions in case the reporting deadlines, set for the 2019 financial year according to the plan to implement IFRS by the NBFI, are exceeded.

Furthermore, the National Bank of Romania is recommended to take the measures deemed appropriate in order to avoid the enforcement of sanctions in case the reporting deadlines, set for the 2019 financial year according to the plan to implement IFRS by the NBFI, are exceeded.

NCMO Recommendation No. R/1/2020
on the countercyclical capital buffer in Romania

Having regard to:

  • the provisions of Art. 3, para. (2), let. b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedure used for setting capital buffers and the scope of these instruments, namely Articles 4-9 on the countercyclical capital buffer, as well as Art. 1 on the applicability of capital buffers,
  • the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by excessive credit growth. The CCyB is built up in periods of excessive credit growth as an add-on to the capital conservation buffer and may be released during credit crunches in order to absorb losses. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

  • the recent developments triggered by the spread of COVID-19 pose new challenges to the economy, entailing the need for measures to uphold the further loan supply to households and non-financial corporations by the banking sector in the period ahead.

Pursuant to:

  • the provisions of Art. 3, para. (1) let. b), e) and i) and the provisions of Art. 4, para. (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has adopted this recommendation:

Considering that total indebtedness currently remains below the signalling threshold and setting a countercyclical buffer rate above 0 (zero) percent is, thus, not necessary, as well as given the uncertainty about the economic and financial developments at local and international level triggered by the spread of COVID-19, the National Bank of Romania is recommended to maintain the countercyclical buffer rate at 0 (zero) percent. Furthermore, the National Bank of Romania should further monitor developments in the economy and lending at aggregate and sectoral levels, with a focus on the impact of COVID-19 epidemic on household and corporate financing by credit institutions.

2018 – 2019

 

2017