Recommendations

1. The European Banking Authority Guidelines EBA/GL/2022/12 amending Guidelines EBA/GL/2020/14 on the specification and disclosure of systemic importance indicators, issued under Art. 16 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing an European Supervisory Authority (European Banking Authority);
2. Articles 15 to 20 of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, specifying the NCMO tasks to identify and to report data of G-SIIs.

Whereas:

• According to point 5 of Guidelines EBA/GL/2022/12, these guidelines are addressed to national competent authorities as defined in point (i) of Article 4(2) of Regulation (EU) No 1093/2010 and to financial institutions in relation to which these guidelines apply. Moreover, the designated authorities referred to in Article 131(1) of Directive 2013/36/EU, other than competent authorities, are encouraged to apply these guidelines;
• Directive 2013/36/EU regulates the activity of: (i) credit institutions, under the supervisory scope of the National Bank of Romania and of (ii) investment firms, authorised as credit institutions according to Article 8a(1) of the Directive, supervised by the Financial Supervisory Authority;
• So far, no global systemically important institutions (G‑SII) were identified within the Romanian banking system, given the relatively small-sized institutions active in the domestic banking market. An entity can be classified as G-SII where its leverage ratio exposure measure exceeds EUR 200 billion (as provided for in para. 6 of EBA/GL/2020/14) on a consolidated or individual basis;
• Pursuant to Article 16(3) of Regulation (EU) No 1093/2010, competent authorities and financial institutions shall make every effort to comply with the guidelines, by implementing provisions into their practices.

Pursuant to:

• the provisions of Art. 3 para. (1) let. c) and k), para. (2) let. b) and para. (4), together with those of Art. 4 para. (1) let. a) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The General Board of the National Committee for Macroprudential Oversight has issued this recommendation:

The National Bank of Romania and the Financial Supervisory Authority, in their capacity as sectoral supervisory authorities, are recommended to comply with the provisions of the European Banking Authority Guidelines EBA/GL/2022/12 amending Guidelines EBA/GL/2020/14 on the specification and disclosure of systemic importance indicators from the date when there are relevant institutions (G-SIIs) within their jurisdiction and to ensure their enforceability against the relevant institutions.

1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by a cyclical increase in risks. The countercyclical capital buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

• the growth rate of lending remains among the highest in the European Union,
• the tensions surrounding macroeconomic equilibria remain elevated,
• the need for additional reserves increases with the level of the current uncertainties.

Pursuant to:

• the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para. (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art. 1 – The National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 1 percent, as of 23 October 2023.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the multiple sources of uncertainty internationally and in the region.

Art.3 – Until 23 October 2023, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.

• the provisions of Art. 3 para. (2) letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system,
• the provisions of Articles 21-24 of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as amended and supplemented by NCMO Regulation No. 1 of 18 December 2020,
• the credit institutions identified as systemically important pursuant to the methodology applied at national level and harmonised with the EBA Guidelines on the criteria to determine the conditions of application of Article 131(3) of Directive 2013/36/EU (CRD) in relation to the assessment of other systemically important institutions (O-SIIs) – EBA/GL/2014/10, based on the data reported as at 31 December 2021,
• the calibration of the capital buffer for other systemically important institutions (O-SII buffer) depending on the scores obtained by systemic banks in the first assessment stage (which determines the mandatory indicators recommended by the European Banking Authority), using the bucketing approach, i.e. 500-basis point buckets, which are assigned O-SII buffer values in ascending order based on systemic importance, in equal increments of 0.5 percentage points (from 0.5 percent to 3 percent), as follows:

Whereas:

• the capital buffer for other systemically important institutions (O-SII buffer) is a capital reserve that shall be set to mitigate systemic risk posed by the size of credit institutions, which does not change significantly throughout the business and financial cycles,
• the O-SII buffer requirements are reassessed on an annual basis, being applicable as of 1 January 2016,
• for O-SIIs with domestic capital and O-SIIs that are a subsidiary of either a G-SII or an O-SII that is an institution or a group whose parent undertaking is an EU parent institution and is subject to an O-SII buffer on a consolidated basis, the applicable O-SII buffer rate is set in accordance with the provisions of Art. 23 para. (1) and Art. 23² para (2) of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented by NCMO Regulation No. 1 of 18 December 2020,

Pursuant to:

• the provisions of Art. 3, para. (1) letters b), c), e) and i) and of Art. 4, para. (1) letter a) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The General Board of the National Committee for Macroprudential Oversight has issued this recommendation:

The National Bank of Romania is recommended to impose, starting 1 January 2023, a capital buffer for other systemically important institutions (O-SII buffer), on an individual or consolidated basis, as applicable, calculated based on the total risk exposure amount for all the credit institutions identified as systemically important based on the data reported as at 31 December 2021, as follows: (i) 2 percent for Banca Transilvania S.A. (consolidated level), (ii) 1.5 percent for UniCredit Bank S.A. (consolidated level), Banca Comercială Română S.A (consolidated level), BRD – Groupe Société Générale S.A. (consolidated level), (iii) 1 percent for Raiffeisen Bank S.A. (consolidated level) and (iv) 0.5 percent for OTP Bank România S.A. (consolidated level), CEC Bank S.A. (individual level), Alpha Bank România S.A. (individual level), and Banca de Export-Import a României EXIMBANK S.A. (consolidated level until the completion of the merger through absorption of Banca Românească and individual level after completing the merger through absorption of Banca Românească).

Information on updated list of systemically important banks and on the buffer for the other systemically important institutions (O-SII buffer) applicable in 2023

1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedure used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by a cyclical increase in risks. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

• Recent experience has shown the importance of proactively building capital buffers to mitigate possible shocks and allow the banking sector to subsequently support economic recovery. The European Systemic Risk Board favours this approach and most EEA countries have decided to tighten macroprudential policy by increasing the countercyclical buffer rate in 2022-2023.
• In the warning issued at end-September 2022[i] , the European Systemic Risk Board warns on the growing risks and the need for both credit institutions and national supervisory authorities or EU institutions to make prudent assessments so as to ensure the resilience of financial institutions and financial market infrastructures, in the event of adverse scenarios materialising. For this purpose, authorities should envisage the relevant micro and macroprudential instruments at their disposal to improve the shock‑absorption capacity across financial institutions.
• At national level, credit institutions are expected to take a cautious approach, inter alia by consolidating the capital base, where:
  • an additional build-up of risks to financial stability is found compared to the previous analysis,
  • the growth rate of lending remains among the highest in the European Union,
  • vulnerabilities associated with current account deficit and budget deficit persist.
• The liquidity and profitability levels of the banking sector allow for an increase in the countercyclical buffer rate, without negatively affecting banks’ loan supply to eligible borrowers.

Pursuant to:

• the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para. (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art.1 – The National Bank of Romania is recommended to raise the countercyclical buffer rate by 0.5 percentage points to 1 percent as of 23 October 2023.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the multiple sources of uncertainty internationally and in the region.

Art.3 – Until 23 October 2023, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.

Note:

iWarning of the European Systemic Risk Board of September 2022 on vulnerabilities in the EU financial system

• the provisions of Art. 2 para. (1) and Art. 3 para. (1) let. b) of Law No. 12/2017 on the macroprudential oversight of the national financial system,
• the pursuit of its ultimate objective, the NCMO has the intermediate objective of the sustainable growth of financial intermediation, according to the Overall Macroprudential Strategy Framework of the National Committee for Macroprudential Oversight, approved by the NCMO’s General Board in its meeting of 21 May 2018,
• NCMO Decision No. D/7/15.12.2021 to set up a Working Group on sustainable increase in financial intermediation,
• the significant role of the sustainable increase in financial intermediation for the Romanian economy and the banking sector,
• the conclusions of the analysis of the NCMO Working Group on sustainable increase in financial intermediation.

Whereas:

• Systemic risks stemming from low financial intermediation remain significant;
• Romania has the lowest level of financial intermediation in the European Union, the indicators standing well below the other countries in the region;
• It is important that the increase in financial intermediation is carried out on a sustainable basis so as to maintain the stability of the financial system;
• Lending to non-financial corporations has a significant growth potential and credit institutions have sufficient liquidity and solvency resources to support the sustainable increase in lending to this sector;
• The structural shift of the economy to a higher value added and environmentally sustainable economy comes as a great opportunity for Romania.

Pursuant to:

• the provisions of Art. 3 para. (1) let. e) and Art. 4 para. (1) let. a) and let. b) of Law No. 12/2017 on the macroprudential oversight of the national financial system.

The National Committee for Macroprudential Oversight has issued this recommendation:

• I. To support the structural shift of the economy to a higher value added economy, inter alia by using European funds more extensively, the NCMO recommends the following:

  1. Harmonise, through dialogue with the banking sector, the process of operationalisation of financial instruments under the NRRP and the Operational Programmes, so that financial instruments ensure a significant transfer of risk for intermediaries, for the purpose of full compliance with the provisions of Regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms, in order to facilitate the access to finance of the firms in the areas concerned, by (i) increasing predictability; and (ii) improving the implementation flow of EU-funded projects.

  The recommendation is addressed to the Government (Ministry of Investments and European Projects). Deadline for implementation: 30 September 2022.

  2. Extend the legal framework in order to admit non-bank financial institutions from the NBR’s Special Register as direct partners in the process of financing and implementing EU-funded projects.

  The recommendation is addressed to the Government (Ministry of Investments and European Projects). Deadline for implementation: 30 September 2022.

  3. Set up government programmes for (i) supporting competitive firms, identified based on a public methodology, inter alia by supporting their easier financing, (ii) implementing sectoral policies, correlated with economic and industrial policies to support the structural shift of the economy to a higher value added economy, which provides for supporting primarily firms in the sectors concerned, (iii) developing the partnership of local authorities, business environment and universities, especially where the local business environment can efficiently use the expertise developed in universities.

  The recommendation is addressed to the Government (Ministry of Economy, Ministry of Investments and European Projects, Ministry of Finance). Deadline for implementation 31 March 2023.

• II. To improve entrepreneurs’ financial education and enhance the professional training of staff in the financial system, the NCMO recommends the following:   

  4. Start, alongside academia and the financial system, new programmes to increase firms’ awareness that funding via trade credits and loans from shareholders might have, in the medium term, higher total costs than those of borrowing from financial institutions and those related to capital market-based funding.

  The recommendation is addressed to the Government (Ministry of Entrepreneurship and Tourism), the National Bank of Romania and the Financial Supervisory Authority. Deadline for implementation: 31 December 2022.

  5. Set up programmes for (i) enhancing entrepreneurs’ financial education, also depending on the firms’ stage of development (start-ups and scale-ups), by organising workshops, conferences, financial education programmes at national level, (ii) creating a national framework for training young people, involving experts from banks and other financial institutions, entrepreneurs, pre-university and university teaching staff, in order to correlate the gradual and applied development of certain necessary business skills in lower, upper and post-secondary education, inter alia with regard to protection against cyber incidents and/or attacks.

  The recommendation is addressed to the Government (Ministry of Entrepreneurship and Tourism, Ministry of Finance, Ministry of Education, Ministry of Agriculture), the National Bank of Romania and the Financial Supervisory Authority.

  Deadline for implementation: 31 March 2023.

  6. Take steps, through dialogue with representatives of credit institutions and non-bank financial institutions, regarding the minimum training requirements for bank and NBFI staff involved in granting loans to companies and managing related risks, with emphasis on staff involved with companies that operate in emerging industries (technology, innovation, digitalisation, green agenda, etc.).

  The recommendation is addressed to the National Bank of Romania.

  Deadline for implementation: 31 December 2023.

  7. Involve more extensively the human and material infrastructure of the NBR and the FSA and increase collaboration with the financial and banking sectors and academia for (i) developing research in the banking and financial field, inter alia via visiting programmes, (ii) partnering for joint projects to improve the theoretical and practical training of future professionals (undergraduate and master’s students, doctoral candidates) and organising master’s programmes or other forms of post-graduate education and traineeships, (iii) supporting the adequate theoretical and empirical foundation of various national and European legislative initiatives or strategic decisions that might involve the financial system (e.g.: joining the Banking Union).

  The recommendation is addressed to the National Bank of Romania and the Financial Supervisory Authority.

  Deadline for implementation: 30 June 2023.

• III. To diversify in a sustainable way the sources that may increase financial intermediation, the NCMO recommends the following:   

  8. Research development opportunities for financial and banking markets, by (i) analysing the development opportunity for a Regulatory Sandbox instrument, as well as analysing the regulatory framework and certain Regulatory Sandbox models developed by other central banks, (ii) increasing the competitiveness of the Romanian capital market by supporting the implementation of innovative technologies based on distributed ledger technology (DLT) among entities ensuring market infrastructure, by implementing a pilot project for a trading system and a settlement system based on DLT, in accordance with the EU framework in the field. The recommendation is addressed to the National Bank of Romania and the Financial Supervisory Authority.Deadline for implementation: 31 March 2023.9. Encourage the listing of firms on the BSE’s Multilateral Trading System, inter alia by (i) simplifying listing procedures and (ii) implementing the use of an electronic platform that can be accessed by the issuer and the authorities tasked with approving listing requests, to ensure a fast process.

  The recommendation is addressed to the Financial Supervisory Authority. Deadline for implementation: (i) 31 December 2022 and (ii) 30 June 2023.

  10. Develop the necessary infrastructure for supporting the digitalisation process of financial services, inter alia by (i) facilitating integrated access to databases regarding clients in order to improve the lending process, as well as to take actions to prevent and combat money laundering and terrorist financing and (ii) harmonising the national legislation to the European framework to ensure flexibility in the implementation of digital initiatives, by recognising the legal effect of both simple and advanced electronic signatures.

  The recommendation is addressed to (i) the Government (Ministry of Finance, Ministry of Internal Affairs) and (ii) the Government (Ministry of Research, Innovation and Digitalisation).

  Deadline for implementation: (i) 30 September 2022 and (ii) 31 December 2022.

  11. Broaden firms’ access to the activity of the Alternative Banking Dispute Resolution Centre, by amending accordingly the provisions of Government Ordinance No. 38/2015 on alternative dispute resolution between consumers and traders, regarding the power of the ABDRC, and on the dispute resolution between firms and traders whose activity is regulated, authorised and supervised/monitored by the NBR, as well as the branches of foreign traders that operate on Romania’s territory, in the banking field, via ABDRC procedures.

  The recommendation is addressed to the Government.

  Deadline for implementation: 31 December 2022

1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by excess credit growth. The CCyB is built up in periods of excess credit growth as an add-on to the capital conservation buffer and may be released during credit crunches in order to absorb losses. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

• Lending continues to follow an upward trend, amid elevated uncertainty across the board,
• The macroeconomic imbalances are persisting,
• High liquidity and profitability levels of the banking sector allow ongoing access to lending of eligible debtors.

Pursuant to:

• the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art. 1 – The National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 0.5 percent, as of 17 October 2022.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the high level of uncertainty internationally and especially in the region.

Art. 3 – Until 17 October 2022, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.

Having regard to:

Pursuant to:

1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by excess credit growth. The CCyB is built up in periods of excess credit growth as an add-on to the capital conservation buffer and may be released during credit crunches in order to absorb losses. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

• Lending has been confirmed on an accelerating trend, amid a global environment marked by uncertainty,
• There are ongoing tensions surrounding macroeconomic equilibria,
• Eligible borrowers’ access to finance is not constrained by this measure, owing to the adequate levels of the liquidity and profitability indicators of the banking sector.

Pursuant to:

• the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art. 1 – The National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 0.5 percent, as of 17 October 2022.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the high level of uncertainty, both domestically and internationally.

Art. 3 – Until 17 October 2022, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.