Statement from the NBS Bank Board’s 15th meeting of 2020
On 14 July the Bank Board of Národná banka Slovenska held its 15th meeting of 2020, chaired by NBS Governor Peter Kažimír.
The Bank Board decided to reduce the countercyclical capital buffer (CCyB) rate from 1.50% to 1.00% as from 1 August 2020.
The CCyB rate reduction is a response to coronavirus-related headwinds, which besides an economic contraction, a gradual deterioration of the labour market situation, and a weakening of credit market trends, include an exceptionally high degree of uncertainty.
The main purpose of the rate reduction is to allow banks to use their capital buffer for further loan-loss provisioning and to ensure they have sufficient available capital for increasing their lending activity. The reduced rate will not only cover current provisioning requirements but will also create leeway for further provisioning increases in the months ahead.
NBS does not expect banks to use the capital freed up by the rate reduction for dividend payments or share buybacks, but rather expects them to use it for preserving their capital resilience and maintaining the essential functions of the banking sector.
As regards the current high degree of uncertainty, the reduced CCyB rate will provide a sufficient buffer against potential losses in the period ahead, including in 2021. If banks’ loan-loss provisioning continues to increase significantly, NBS stands ready to reduce the CCyB rate with immediate effect.
The current settings of the CCyB rate for domestic exposures, as determined by decisions of the NBS Bank Board, are as follows:
CCyB RATE FOR DOMESTIC EXPOSURES
| Period of application | Rate |
|---|---|
| 1 August 2019 – 31 July 2020 | 1.50% |
| 1 August 2020 – | 1.00% |
The Bank Board approved the notification of the issuance of a €10 silver collector coin commemorating the 150th anniversary of the birth of Štefan Banič.
The coin is made from an alloy of silver (90%) and copper (10%), weighs 18 g, and has a diameter of 34 mm. Designed by Peter Valach and produced by the Kremnica Mint, the coin is due to go on sale in October 2020.
The Bank Board approved the notification of the issuance of a €2 commemorative coin marking the 20th anniversary of the accession of the Slovak Republic to the Organisation for Economic Co-operation and Development (OECD). Due to be issued in November 2020, the commemorative coin will have the same technical parameters as normal €2 coins and will be legal tender in Slovakia and the rest of the euro area. Its national side was designed by Peter Valach.
The coin has been produced by the Kremnica Mint in Slovakia and has a total issuing volume of one million pieces.
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