Bank of Spain to raise countercyclical capital buffer to 1.0%

MADRID, Oct 1 (Reuters) - The Bank of Spain said on Wednesday it had approved an increase in the countercyclical capital buffer to 1.0% from 0.5%, coming into effect on October 1, 2026.

The buffer seeks to mitigate or prevent cyclical risks caused by excessive growth in aggregate credit by requiring lenders to build insurance reserves during times of strong growth which would then be available in the case of a downturn.

Until now, the buffer was only activated when risks were high, but now it will be applied when risks are at an intermediate level as they currently are, the central bank said.