BaFin

Topic Own funds General Administrative Act on section 10d (3) sentence 2 of the German Banking Act (Kreditwesengesetz – KWG)

BA 51-AZB 1130-2015/0009

Date: 28.12.2015

General Administrative Act of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) dated 28 December 2015 on the setting of the rate for the countercyclical capital buffer pursuant to section 10d (3) sentence 2 of the KWG

To
all institutions within the meaning of section 1 (1b) of the KWG

I.

Setting of the rate for the countercyclical capital buffer

I hereby set the rate for the countercyclical capital buffer pursuant to section 10d (3) sentence 2 of the KWG at 0% effective as of 1 January 2016.

Grounds:

The general administrative act governs the setting of the German rate for the countercyclical capital buffer. Based on section 10d (3) of the KWG BaFin sets the rate for the domestic countercyclical capital buffer. In doing so, BaFin must take into account deviations in the ratio of credit to German gross domestic product (GDP) from its long-term trend (cred-it-to-GDP gap) and any recommendations made by the German Financial Stability Committee.

The deviation in the credit-to-GDP ratio from its long-term trend was analysed and assessed using the latest available data on credit volume and GDP (in both cases the second quarter of 2015). For the assess-ment, the two values were first put in relation to each other. Then the long-term trend of the ratio was calculated using a statistical procedure and subtracted from the relation. This resulted in a value of -6.57 per-centage points (credit-to-GDP gap). The trend of this value has recently shown a slight rise but it is still clearly in the negative zone and thus es-sentially implies that the countercyclical capital buffer should be set at 0%. Referred to the estimations and analyses of the European Systemic Risk Board (ESRB), which BaFin is supposed to use as a guideline pursu-ant to the Recommendation 2014/01of the ESRB, in principle a positive countercyclical buffer is only recommended when the credit-to-GDP gap is larger than two percentage points. Additionally, other indicators have been taken in consideration, in order to take adequate account of the risks associated with excessive credit growth for the banking sector.

In conclusion, the overall assessment of the credit-to-GDP gap, as de-scribed, and the other economic indicators which are suitable to assess risks in the banking and financial sector showed that the appropriate rate for the countercyclical capital buffer is currently 0%.

II.

The general administrative act shall be deemed announced on the day following the customary announcement.

III.

Instruction on available remedies:

Objections to this General Administrative Act can be submitted to BaFin in Bonn or Frankfurt am Main within one month of its announcement.

Bonn, 28 December 2015

Raimund Röseler

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