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BPI and CGD with lower capital requirements than the ECB to cover asset risks

BPI and CGD with lower capital requirements than the ECB to cover asset risks

As already happened with the Caixa Geral de Depósitos and the BCP, the ECB maintained the total Pillar II requirement at 1.9% in the BPI.

Banco BPI informed the market that it has been notified by the European Central Bank (ECB) of the decision on the minimum prudential capital requirements and leverage ratio for 2024, following the results of the Supervisory Review and Evaluation Process (SREP).

As already happened with the Caixa Geral de Depósitos and the BCP, the ECB maintained the total Pillar II requirement at 1.9% in the BPI.

This component of the ratio is determined based on the total value of risk-weighted assets (RWA). Therefore, the lower the condition, the better the quality of the bank’s credit portfolio. Thus, of the four banks that have published the ECB’s capital ratio requirements, BPI and CGD are in the best position.

The component of the regulatory capital ratio required depending on asset quality is the highest in Novobanco (2.85%), followed by BCP with a requirement of 2.50% and the best being Caixa and BPI with a requirement of 1.9% each.

Novobanko was the only company to see a decline in demand, revealing a path towards improving the quality of its portfolio.

BPI today reveals that as of January 1, 2024, it “must meet the minimum requirement of 8.58% for Common Equity Tier 1 (CET1) equity ratio, which includes the regulatory minimum for Pillar 1 (4.5%), and the Pillar 2 requirement (1.07). %)”. %) – Requirements that apply only on a consolidated basis – Capital Conservation Buffer (2.5%), Other Systemically Important Institutions Reserve (0.5%), and Countercyclical Buffer (0.01%).

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Likewise, the minimum requirements for Tier 1 Capital Ratio and Total Equity Ratio are 10.43% and 12.91%, respectively.

“Finally, as of January 1, 2024, Banco BPI must adhere to a minimum requirement of 3% for leverage ratio, which includes a regulatory minimum for Pillar 1 of 3% and a Pillar 2 requirement of 0%,” says the João-led bank. Pedro Oliveira and Costa.

In September 2023, as shown in the following table, BPI comfortably exceeded all requirements.

In addition to these requirements, effective October 1, 2024, Banco BPI, through its Principal Private Fund Level 1 (CET1), must comply with additional risk capital requirements.
Systematic impact on the residential real estate market in Portugal.

“This sector regulatory reserve translates, on a pro forma basis in September 2023, into an estimated increase in own funds requirements of 78 basis points,” he adds.