The NCMO meeting of 19 October 2023
This year’s third meeting of the General Board of the National Committee for Macroprudential Oversight (NCMO) was held on 19 October 2023.
During the meeting, Board members examined analyses and adopted measures concerning macroprudential policy and systemic risk, namely: (i) examining the regular analysis on the recalibration of the countercyclical capital buffer, (ii) examining the regular analysis on the recalibration of the capital buffer for systemically important institutions, as well as (iii) not applying through voluntary reciprocity the macroprudential policy measures adopted by Sweden, set forth in Recommendation ESRB/2023/4.
The NCMO General Board was informed of: (i) the regular analysis on the systemic risk buffer (SyRB); (ii) the impact of credit institutions’ funding plans on the flow of credit to the real economy; (iii) the systemic risks to financial stability identified by member authorities as per their specific area of competence, with 30 June 2023 as reference date, as well as (iv) the analysis on the implications of introducing an additional tax on banks in Romania.
The NCMO General Board approved NCMO Recommendation No. R/3/2023 on the countercyclical capital buffer in Romania. The applicable rate for the said macroprudential buffer will be 1 percent starting 23 October 2023. The liquidity and profitability indicators of the banking sector in Romania enable the consolidation of macroprudential policy without negatively influencing the loan supply to eligible borrowers. The consolidation trend of banking sector profitability has continued and credit institutions may allocate some of these profits for prudential purposes by strengthening capital reserves – in line with EU best practices and recommendations. Preserving the adequate level of macroprudential policy domestically constitutes, in fact, a necessary precautionary measure in light of the elevated degree of uncertainty globally.
NCMO Recommendation No. R/4/2023 on the capital buffer for other systemically important institutions in Romania was approved. Thus, the National Bank of Romania is recommended to implement, starting 1 January 2024, at the highest level of consolidation, a capital buffer for other systemically important institutions (O-SII) applicable to banks identified as systemically important pursuant to the Methodology for identifying systemic credit institutions and calibrating the O-SII buffer, based on data reported as at the reference date of 31 December 2022. This measure is subject to prior notification of the ESRB. The NCMO recommendation and the buffer rate applicable to each systemic bank will be published on the NCMO website by 1 December 2023.
Moreover, the members of the NCMO General Board decided not to voluntarily reciprocate the macroprudential measures of Sweden, given that the eligible exposures of the local banking sector to this country are immaterial.
The NCMO recommendations and decisions were unanimously approved by the NCMO General Board.
The NCMO was established by virtue of Law No. 12/2017 on the macroprudential oversight of the national financial system, thus ensuring that Recommendation of the European Systemic Risk Board (ESRB) No. 3/2011 on the macroprudential mandate of national authorities was implemented. The NCMO brings together representatives of the National Bank of Romania, the Financial Supervisory Authority and the Government of Romania. The NCMO’s mission is to ensure coordination in the field of macroprudential oversight of the national financial system by setting the macroprudential policy and the appropriate instruments for its implementation.