NBS to increase the banks’ counter-cyclical capital cushions
The central bank NBS made a preliminary decision on Tuesday to increase the banks’ counter-cyclical capital cushions, announced Governor Peter Kažimír. This should improve the banks’ resilience if interest rates rise and borrowers default on their loans. NBS also wants to slow down the growth in retail lending that remains above 10%. The cushion was increased to 1.5% this year and NBS aims to increase it to 2% in 2020. Most of the banks already have cushions at the higher level. So far, not even the NBS-imposed credit standards tightening has reduced the growth in lending.