Provision of a general nature I/2026

of 4 June 2026

on setting the countercyclical capital buffer rate for the Czech Republic No. I/2026

Pursuant to Article 12o(6) of Act No. 21/1992 Coll., on Banks, as amended (hereinafter referred to as the “Act on Banks”) and Article 8al(6) of Act No. 87/1995 Coll., on Credit Unions and Certain Related Measures and on the Amendment of Czech National Council Act No. 586/1992 Coll., on Income Taxes, as amended, as amended (hereinafter referred to as the “Act on Credit Unions”), the Czech National Bank as a competent administrative body hereby issues the following provision of a general nature:

1. Pursuant to Article 12o(4) of the Act on Banks and Article 8al(4) of the Act on Credit Unions, the countercyclical capital buffer rate for the Czech Republic shall be set at 1.5% of the total risk exposure amount pursuant to Article 92(3) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council.
2. Entities pursuant to Article 12m(1) of the Act on Banks and credit unions shall apply the rate referred to in point I for the purposes of calculating the combined buffer requirement as from 1 July 2027.

Justification

1. Pursuant to Article 12o(4) of the Act on Banks and Article 8al(4) of the Act on Credit Unions, the Czech National Bank (hereinafter referred to as the “CNB”) shall assess the degree of cyclical systemic risk, based on which it may set or amend the countercyclical capital buffer rate for the Czech Republic, taking into account the countercyclical capital buffer guide calculated pursuant to Article 12o(2) and (3) of the Act on Banks and Article 8al(2) and (3) of the Act on Credit Unions, the recommendations issued by the European Systemic Risk Board (hereinafter referred to as the “ESRB”) and indicators which may imply growth in systemic risk.
2. Pursuant to Article 12o(2) and (3) of the Act on Banks and Article 8al(2) and (3) of the Act on Credit Unions, the calculation of the buffer guide is based on the deviation of the credit-to-GDP ratio from its long-term trend – the credit-to-GDP gap. The credit-to-GDP ratio was 85.2% and the relevant deviation from the long-term trend -4.8 pp in 2025 Q4.^[1] This value corresponds to a benchmark countercyclical capital buffer rate of 0%. The additional gap,^[2] which is based on the ESRB Recommendation (section B, Article 2) and better reflects the specificities of the economy in the Czech Republic, was 2.1 pp in 2025 Q4 and implies a benchmark rate of 0.25%.
3. In reaction to the ESRB recommendation, the CNB has repeatedly emphasised that it does not regard the size of the gaps referred to in paragraph 2 as a reliable guide for determining the position of the domestic economy in the financial cycle and setting the countercyclical capital buffer rate. The CNB prefers an approach based on a comprehensive assessment of indicators identifying growth in systemic risks under Article 12o(4) of the Act on Banks and Article 8al(4) of the Act on Credit Unions.^[3]
4. The main indicators monitored include the financial cycle indicator (FCI). Its continued increase confirmed that the Czech economy moved further into the expansionary phase of the financial cycle. The increase in the FCI was driven primarily by growth in genuinely new bank loans to households for house purchase and for consumption. In March 2026, their monthly volumes exceeded CZK 45.8 billion and CZK 18.2 billion respectively, well above the averages for 2016–2025. Loans drawn by non-financial corporations also started to be reflected more strongly in the FCI; they exceeded CZK 103 billion in March 2026, an increase of almost 17% on a year earlier. The growth in new loans was reflected in year-on-year growth in outstanding loans and contributed to higher bank indebtedness of both households and non-financial corporations.^[4] Residential property prices, which grew briskly in 2025, continued to strongly affect the FCI, and transaction activity on the property market exceeded the ten-year average.^[5]
5. The total amount of cyclical systemic risks in banks’ balance sheets can still be viewed as relevant, including in relation to the actual level of provisioning and the ratio of provisions to total loans. The CNB’s updated estimate of the potential unexpected cyclical credit losses increased to CZK 27.3 billion. A potential increase in risk weights in the event of a significant deterioration of the economic situation with systemic impacts, which would indirectly lead to a rise in the capital requirement in absolute terms, may also be a source of systemic risk. The capital needed to cover the fall in the capital ratio as a result of the potential cyclical rise in risk weights would amount to CZK 28.5 billion according to the CNB’s estimates. The total additional capital needed to cover unexpected cyclical credit losses and the growth in risk weights thus amounts to CZK 55.8 billion, which corresponds to a countercyclical capital buffer rate of 1.78%.
6. Based on the above assessment, the CNB Bank Board decided to increase the countercyclical capital buffer rate to 1.5% of the total risk exposure amount in order to maintain the resilience of the banking sector. In its decision, it took into account the current economic situation, the evolution of the financial cycle, the results of quantitative methods for setting the countercyclical capital buffer rate and the configuration of the other macroprudential instruments. It agreed that the growth in cyclical systemic risks had become broad-based, and that the steadily declining credit default rate and coverage of loans by provisions confirm a further shift into the expansionary phase of the financial cycle. In view of the uncertainty associated with future economic developments and the configuration of other macroprudential instruments, in particular borrower-based measures applied to the provision of mortgage loans, it concluded that a 0.25 pp increase in the rate is sufficient to cover the current level of accumulated cyclical systemic risks. Entities pursuant to Article 12m(1) of the Act on Banks and credit unions shall apply a countercyclical capital buffer rate of 1.5% for the purposes of calculating the combined capital buffer from 1 July 2027.
7. The circumstances and conditions described in paragraphs 4–6 give the CNB room to evaluate future macro-financial developments, taking into account domestic and global uncertainties and the risks of the CNB’s spring forecast. The Bank Board stands ready to increase the countercyclical capital buffer rate further if the strengthening of credit growth and the increase in indebtedness in both sectors of the real economy were to continue and lead to a further shift into the expansionary phase of the financial cycle. By contrast, should the economic situation worsen markedly and significant unexpected cyclical credit losses form in the domestic banking sector, the CNB is ready to lower the buffer rate or release the buffer fully in order to foster smooth lending to the real economy.
8. Pursuant to Article 12x(1) of the Act on Bank and Article 8au(1) of the Act on Credit Unions, this provision of a general nature is announced only in a manner facilitating remote access and takes effect on the day of its publication.
9. The previously issued provisions of a general nature on setting the countercyclical capital buffer rate for the Czech Republic shall lose legal effect upon the publication of this provision of a general nature.
10. The countercyclical capital buffer rate set by this provision of a general nature shall apply until another provision amending this rate is issued.

Effect

This provision of a general nature shall take effect on 5 June 2026.

This provision of a general nature was published on 5 June 2026.

^[1] In accordance with ESRB Recommendation 2014/1 (Recommendation of the European Systemic Risk Board of 18 June 2014 on guidance for setting countercyclical buffer rates), total credit means the value of all loans provided to the private sector (non-financial corporations, households and non-profit institutions serving households) plus the volume of bonds issued by the domestic private sector. The time series of 1995 Q4–2025 Q4 and the Hodrick-Prescott filter with a smoothing parameter (λ) of 400,000 are used to calculate the long-term trend of the credit-to-GDP ratio.

^[2] The additional gap – the expansionary credit gap – is calculated as the difference between the current ratio of bank loans to gross value added of the private non-financial sector and the minimum level of this ratio achieved in the past eight quarters.

^[3] The methodological framework of the Czech National Bank for setting the countercyclical buffer rate is presented in the document The CNB’s approach to setting the countercyclical capital buffer.

^[4] The annual growth rates of bank loans provided to households for house purchase and for consumption were 8.3% and 10.8% respectively as of 31 December 2025. Bank loans to non-financial corporations were up 5.1% year on year as of 31 December 2025. The ratio of bank loans to households to annual gross disposable income was 50.9% and the ratio of bank loans to non-financial corporations to annual gross operating surplus 74.5% as of 31 December 2025.

^[5] The year-on-year change in the house price index (HPI) was 10.4% as of 31 December 2025.