BaFin orders countercyclical capital buffer of 0.75% and capital buffer for systemic risks from residential real estate financing of 2.0%
With effect from 1 February 2023, BaFin has announced a countercyclical capital buffer of 0.75%. This step, which probably came as a surprise to many observers at least in terms of its amount, is justified on the one hand with the expansive lending of the German banking industry, and on the other hand with the positive economic outlook and precisely the associated possibility for the banks to also be able to build up the countercyclical buffer.
In addition, BaFin’s move to introduce a capital buffer for systemic risks from residential real estate financing of 2.0% may have come as a greater surprise: this type of specific capital surcharge is new; on the other hand, this measure is basically understandable in view of the development of real estate prices in Germany and the warnings of the Deutsche Bundesbank that have been taking place for several years in the context of the financial stability reports. The specific capital buffer for systemic risks must also be applied from 1 February 2023.
BaFin assumes that the vast majority of institutions will be able to fulfil both capital buffers without further capital measures, as the actual capital ratios are in part significantly higher than the regulatory requirements.
For BaFin’s announcement, see: