Banco de Portugal (BdP) will maintain the waiver of the constitution of a countercyclical reserve for banks in the first quarter of next year, as it happened throughout 2021, it was announced this Friday.

“The percentage of countercyclical own funds reserve to be in effect from 1 January 2022 will remain at 0% of the total amount of exposures” reads a statement issued this Friday by the Bank of Portugal.

In the note, the banking supervisor added that “the decision was taken by resolution of the Board of Directors of December 21, 2021, after notifying the European Central Bank, which did not object to the Bank of Portugal’s proposal, and consulting the National Board of Supervisors Financial”.

The percentage of countercyclical equity reserve “applies to all credit risk positions, whose counterpart is the national non-financial private sector, credit institutions and investment firms supervision of supervision by the Bank of Portugal or the Bank Central European (Single Supervision Mechanism), and is reviewed quarterly”, the note said.

The decision on the percentage of countercyclical equity reserve is published on the Bank of Portugal website, together with an analysis and underlying indicators as well as the methodological document.

Also available on the website is information on the percentages of countercyclical reserve applicable to certain member states of the European Union / European Economic Area, arbitrator in the communiqué.

During 2019 and 2020, the BdP exempted the banks that constituted this reserve, the same happening in 2021.

The countercyclical capital reserve corresponds to a complementary reserve found by own funds [capital] tier 1 (‘Common Equity Tier 1’) principals, which aim to protect the banking sector in periods when cyclical systemic risk increases due to excessive credit growth, according to information available on the central bank’s website .