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Czech National Bank cuts banks’ capital buffer rate again

The Czech National Bank (CNB) cut the countercyclical capital buffer rate for banks for the second time since the end of March, seeking to bolster a sector key to reviving an economy hit by the coronavirus outbreak, news wire Reuters reports. 

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The central bank also eased some mortgage lending recommendations for banks but said the crisis so far had not hit property prices, although their decline could come in the coming quarters given the economic situation.

As part of a financial stability review, the CNB said on June 18 the banking sector remained robust thanks to capital buffers and surpluses.

The bank cut the countercyclical capital buffer rate to 0.5% from 1%, with effect from July, and reiterated it was ready to release the buffer fully if needed.

The Czech Republic was among a handful of European countries that had the buffer in place going into the crisis. It was designed to safeguard the sector against economic swings, growing in good times while falling in worse, Reuters noted.