The NBS Head Office Building was built from 1888 – 1890, on the basis of blueprints designed by Konstantin Jovanovic (Vienna 1849 – Zurich 1923), son to distinguished artist Anastas Jovanovic...
One of the most important innovations introduced by Basel III standards are capital buffers. Capital buffers are additional Common Equity Tier 1 capital that banks are obliged to maintain above the prescribed regulatory minimum. Their introduction has several advantages: the buffers increase the resilience of banks to losses, reduce excessive or underestimated exposures and restrict the distribution of capital. These macroprudential instruments should limit systemic risks in the financial system, which can be cyclical (capital conservation buffer and countercyclical capital buffer) or structural (capital buffer for a systemically important bank and systemic risk buffer).
Capital buffers in Serbia | Current rate | Notes |
---|---|---|
Capital conservation buffer (Section 434 of the Decision on Capital Adequacy) |
2.5% |
The Decision on Capital Adequacy of 15 December 2016 sets out that a bank is obliged to maintain a capital conservation buffer on an individual and consolidated basis equal to 2.5% of its risk-weighted assets. The capital conservation buffer may consist only of Common Equity Tier 1 capital and applies as of 30 June 2017. |
Countercyclical capital buffer (Section 435 of the Decision on Capital Adequacy) |
0% |
The Decision on the Countercyclical Buffer Rate for the Republic of Serbia of 8 June 2017, applied as of 30 June 2017, sets the rate at 0%. At its meeting of 12 September 2024, the NBS Executive Board decided to keep the countercyclical capital buffer (CCyB) rate for the Republic of Serbia at 0%, having in mind that:
Explanation: The credit-to-GDP ratio was slightly above its long-term trend in Q2 2024, but the credit-to-GDP gap was below the 2 pp threshold[1] needed for the introduction of the countercyclical capital buffer. By keeping the CCyB rate at 0%, the NBS continues to support the lending market in an environment of persistently tight global financing conditions. |
Capital buffer for a systemically important bank (Section 452 of the Decision on Capital Adequacy) |
1–2% |
The Decision on Establishing a List of Systemically Important Banks in the Republic of Serbia and Capital Buffer Rates for Those Banks of 10 May 2024 establishes systemically important banks and the capital buffer rates that those banks are obligated to maintain as of 30 June 2024. |
Systemic risk buffer (Section 446 of the Decision on Capital Adequacy) |
3% |
The Decision on the Rate and Manner of Maintaining the Systemic Risk Buffer of 8 June 2017, with changes from 11 January 2018, sets the systemic risk buffer, applied as of 30 June 2017.
Explanation: The systemic risk buffer is introduced to limit the risk of euroisation, one of the key structural non-cyclical systemic risks to the stability of the financial system of the Republic of Serbia. Exposures: The systemic risk buffer recognises exposures in the Republic of Serbia. |
1 See: Recommendation of the European Systemic Risk Board of 18 June 2014 on guidance for setting countercyclical buffer rates (ESRB/2014/1), Annex Part II.