Countercyclical Capital Buffer Rates for Foreign Jurisdictions?

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August 2019

CRD IV, as implemented in the United Kingdom, includes a transitional period during which the Financial Policy Committee of the Bank of England is responsible for deciding whether Countercyclical Capital Buffer (CCyB)  rates set by other EEA states should be recognised, which CCyB rates should be set for exposures in those jurisdictions outside the EEA,  and whether to impose a higher third country rate for the purposes of UK firms when calculating and reporting their exposures in foreign jurisdictions – i.e. their CCyBs.

CCyB Rates on Foreign Exposures

Below shows the positive Countercyclical Capital Buffer (CCyB or CCB) Rates that are recognised or have been set by the Bank of England’s Financial Planning Committee (FPC).

This details all of the Countercyclical Capital Buffer Rates as set by the FPC that firms in the UK must currently meet in addition to pending rates that have been announced by the FPC and are to be implemented at a future date. .

Foreign exposures of UK firms in specific countries

Existing Countercyclical Capital Buffer (CCyB) Rates in addition to pending rates:

N.B. The information in the table above reflects FPC decisions taken on or before 9th July 2019.

For information on other EEA CCyB rates, visit our section on CCyB rates by Jurisdiction.

CCyB rates on foreign exposures

Part of the foundation of the Countercyclical Capital Buffer framework is that when lending cross-border, Foreign Institutions should face the same Countercyclical Capital Buffer Rate as Domestic Institutions.

CRD IV gives effect to this requirement within the EEA, in accordance with the Basel international agreement.

Therefore, under these arrangements, where a foreign authority sets a Countercyclical Capital Buffer rate, this can be applied to the foreign exposures of domestic institutions, within each institution specific CCyB rate. This process is referred to as recognition or if it is mutual, then reciprocation.

Reporting Foreign Exposures

COREP reporting template C 09.04 collects information upon the breakdown of credit exposures relevant for the calculation of the countercyclical buffer by country and institution-specific countercyclical buffer rate (CCB).

See also:

• What is the Current UK CCyB Rate?

The Countercyclical Capital Buffer is capital a firm will have to set aside in relation to exposure in other jurisdictions.

The new capital buffers - the Countercyclical Buffer and the Capital Conservation Buffer - took effect from 1st January 2016

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