The ECB requires lower capital from Novobanco for 2024 and maintains BCP and CGD requirements

Caixa Geral de Depósitos (CGD), BCP and Novobanco banks informed the market of the minimum prudential requirements applicable in 2024.

The requirements to be observed depend on the results of the supervisory review and evaluation process (SREP) and are determined according to the total value of risk-weighted assets (RWA).

What we find is that the component of the regulatory capital ratio required depending on asset quality is higher in Novobanko (2.85%). Next is BCP with a requirement of 2.50% and the best is Caixa with a requirement of 1.9%.

Which means that the state bank has less risk, from the regulator’s point of view.

However, while Pillar 2 requirements in BCP and CGD remain unchanged in 2024 compared to 2023, they show improvement in Novobanco. This is exactly what the statement said when it was stated that “Novobanko’s Pillar 2 Requirement (P2R) in 2024 is 2.85%, which represents a decrease of 15 basis points, reflecting the continued improvement in the supervisor’s perception of the bank’s overall risks, including profitability.” fixed rates, which contribute significantly to improving Novobanko’s capital position.”

The Banque Centrale Populaire, in turn, reveals that “requiredMaintaining minimum precautionary sites that will come into effect from January 2024–If it does not change compared toRequirements that will take effect in 2023.

CGD says that “ The requirements for the second pillar of CGD in 2024 remain unchanged at 1.9%, after being reduced by 10 basis points. In 2023 and 25 basis points in 2022.”

In the case of BCP, the Miguel Maya-led bank explains that “buffers [do rácio de capital] Includes Own Funds Conservation Reserve (2.5%), Countercyclical Reserve (0%) and Other Systemically Important Institutions Reserve (O-SII: 1.0%).

In turn, CGD says that “s Stores It includes a reserve to preserve private funds (2.5%), and a reserve to counter cyclical fluctuations (0%) and the “other systemically important institutions” reserve, which was reduced from 1% to 0.75%, reflecting the supervisor’s assessment of CGD’s low systemic risk.

In addition to these requirements, which are repeated annually, a new capital reserve has been added for systemic risks associated with housing credit.

Only the BCP refers to it in the statement, saying that “the Bank of Portugal’s decision translates into a requirement to comply with the sectoral systemic risk reserve of 4% on the amount of risk exposure in the retail portfolio of people and secured natural assets.” Through residential properties located in Portugal, calculated in accordance with Article 92, paragraph 3, of Regulation (EU) 575/2013, as of October 1, 2024, at the highest level of consolidation in Portugal, with the legal framework in place.”

The central bank had already said that this reserve would translate on a pro forma basis, with reference to September 2023, in an estimated increase in own funds requirements of 26 basis points.

Unsurprisingly, all banks now have capital ratios that exceed the European Central Bank’s requirements.

“Taking into account the ratios registered on September 30, 2023, the Banque Centrale Populaire exceeds the minimum ratios required in terms of CET1, Tier 1 and aggregate ratio,” the bank said.

“CGD’s capital ratios, as of September 30, 2023, exceed the new minimum requirements in terms of CET1, Tier 1 and Total Capital by very large margins (11.24 percentage points, 9.40 percentage points and 7.19 basis points respectively), which Highlights strong solvency,” reads a CGD statement.

Novobanco also wrote that 30 of September 2023, the bank’s capital ratios have already exceeded the requirements minimum in CET 1, Tier 1 and in Solvency With big margins (7,8s, 5,7s that it 5,8s, respectively1), Highlighting strong financial solvency.”

Novobanco’s core capital ratio (CET1) is 16,5%. The rate of the Banque Centrale Populaire reached 14.9% in September (in version Fully implemented) and the CGD ratio is 20.06%.