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NBS sends recommendations on capital stability to banks

Slovak banks will receive advice the National Bank of Slovakia (NBS), Slovakia's central bank, about how to support their own stability and self-sufficiency, especially in the sphere of capital and liquidity, the TASR newswire reported.

Slovak banks will receive advice the National Bank of Slovakia (NBS), Slovakia's central bank, about how to support their own stability and self-sufficiency, especially in the sphere of capital and liquidity, the TASR newswire reported.

The recommendations are being provided in response to current developments on the financial markets linked to the debt crisis in Europe. One of the specific risks may be an increase in the banking levy, which could negatively affect the profits of the banks and their ability to strengthen their capital position, according to NBS. However, the central bank considers the Slovak banking sector to be stable, with one of the highest levels of capital adequacy – i.e. the percentage ratio of a financial institution’s primary capital to its assets, used as a measure of its financial strength and stability – in the European Union.

“There are new, growing concerns about the stability of the banking sector in the countries of central and eastern Europe regarding the close interconnection of the subsidiaries in these countries to their parent companies,” representatives of the NBS said, as quoted by TASR.

One of the recommendations to banks with a licence in Slovakia is to sustain their capital adequacy at a level of at least 9 percent as well as to create sufficient reserves which could be used in critical situations.

For banks with a capital adequacy of under 9.625 percent, the NBS recommends using 100 percent of their profits to top up their own resources, while for banks with a capital adequacy over 11.5 percent, the NBS does not see any reason to increase reserves, TASR wrote.

Source: TASR

Compiled by Radka Minarechová from press reports
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