BDP dispenses with countercyclic reserve banks

Banco de Portugal (BDP) again dismissed countercyclic reserve banks from April. But in a statement issued Monday, he recalled that in 2026 he will have the value of 0.75%.

« The percentage of countercyclic reserve of their own funds to be in force from April 1, 2025 will remain at 0% of the total amount of positions at risk, before going to 0.75% from January 1, 2026, » said the regulator and bank supervisor in a statement.

According to the Lusa Agency, this decision was made by deliberation of the Board of Directors of Banco de Portugal, having consulted the National Council of Financial Supervisors.

The Capital Countercycling Reserve corresponds to an additional reserve consisting of Main Funds (Capital) of Common Equity Tier 1 (1), which aims to protect the banking sector during periods when the cyclical systemic risk increases due to excessive credit growth.

In October last year, the regulator and bank supervisor explained that he decided to change this amount while there is a positive phase of the economic cycle so that in the future, at a time of problem growth growth, they have more ability to absorb losses and mitigate the drop in loans.

The BDP also states that this review is « in line with the trend followed by several macroprudential authorities in Europe and the guidelines of several international authorities. »

Bank regulators and supervisors have been warning banks to use part of current profits to increase capital « pillows » and thus be better prepared for future crises.