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Bulgarian c-bank sets countercyclical buffer at 1% for Q4 2020

Author Mario Tanev
Bulgarian c-bank sets countercyclical buffer at 1% for Q4 2020 Photo by Dennis Jarvis.

SOFIA (Bulgaria), September 18 (SeeNews) - Bulgaria's central bank said that it has set the countercyclical capital buffer rate applicable to credit risk exposures in the country at 1% for the fourth quarter of 2020, as heightened activity on the housing and consumer loans segments continued in the second quarter of 2019.

"Periods of rapid lending growth may be associated with gradual accumulation of cyclical risks which could manifest themselves if borrowers’ debt servicing capacity becomes impaired by a potential future economic downturn and a rise in interest rates’ risk premiums," the Bulgarian National Bank (BNB) said in a statement on Tuesday.

The credit-to-GDP ratio amounted to 95.3% at the end of June 2019 - a negative deviation from the long-term trend of 41 percentage points, which corresponds to zero value of the reference indicator for the countercyclical buffer.

The countercyclical capital buffer rate will remain at 0% until the end of September 2019, and will subsequently be increased to 0.5% for the fourth quarter of this year and the first quarter of 2020, before going up to 1% for the second and third quarters of 2020.

The countercyclical capital buffer rate for the first quarter of 2021 will be set in December this year.

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