The Central Bank announced the introduction of the countercyclical capital buffer (CCB) in relation to Irish exposures, pursuant to the European Union (Capital Requirements) Regulations 2014. The CCB will come into effect as of 1 January 2016 at a rate of 0 per cent for the State. In setting the rate at 0 per cent, the Central Bank had regard to the subdued levels of credit in the economy, house-price expectations, lack of supply driving increases in commercial property.
The Central Bank also identified the Bank of Ireland (BoI) and AIB as domestically systemically important for the purposes of the European Union (Capital Requirements) Regulations 2014. Due to their particular importance to the Irish financial sector and domestic economy, the Central Bank has decided that a buffer rate of 1.5 per cent (to be held in the form of CET1) will be applied to both institutions on a consolidated basis. This requirement will be phased in over the period 1 July 2019 to 1 July 2021. In setting the rates for the two systemically important banks, the Central Bank had regard to the size and importance of the two banks to the economy, the importance of the payments system and reputational indicators, the concentration of the market, and peer reviews in other EU countries.
The Central Bank has produced an FAQ on Countercyclical Capital Buffers and Other Systemically Important Institutions Buffers.