The National Bank of Serbia (NBS) announced today that the rate of the countercyclical protective layer of capital for Serbia has been kept at an unchanged level and that the central bank of our country continues to support the credit market in conditions of tough global financial conditions.
As stated, the decision to keep the rate of the countercyclical protective layer of capital for Serbia at the level of zero percent was made by the executive board of the NBS at its meeting on December 7th.
The NBS reminds that within its jurisdiction it determines measures and activities to preserve and strengthen the stability of the financial system, and based on the Decision on the adequacy of the bank’s capital, it calculates a reference indicator on a quarterly basis, on the basis of which it determines the rate of the countercyclical protective layer of capital for Serbia.
It is added that the calculation of the reference indicator is based on the deviation of the mutual ratio of total loans and gross domestic product from its long-term trend.
“Based on data from September 2023, the share of total loans in the gross domestic product was 86.9 percent, while the estimated value of the deviation of this share from its long-term trend was 0.2 percentage points,” the NBS statement reads.
Protective layers of capital are additional basic share capital that the bank is obliged to maintain above the prescribed regulatory minimum, and as stated by the NBS, the advantages of their introduction are that they increase banks’ resistance to losses, reduce excessive or undervalued exposures and limit the distribution of capital.
The capital adequacy decision of December 15th, 2016 stipulates that the bank is obliged to maintain a protective layer for capital preservation on an individual and consolidated basis in the amount of 2.5 percent of its risk assets, and the protective layer for capital preservation can only consist of from the elements of the basic share capital and applies from June 30th, 2017.
