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Press release of the Banco de Portugal on the list of material third countries for the purposes of recognising and setting countercyclical capital buffer rates: 2020-2021

The Banco de Portugal, within the powers conferred upon it as the national macroprudential authority, decided that the list of material third countries, valid until the second quarter of 2021, for the purposes of recognising and setting the countercyclical capital buffer (CCyB) rates for exposures to third countries, includes the Federative Republic of Brazil, the Republic of Mozambique and Macao Special Administrative Region of the People’s Republic of China.

Compared to the previous year, the current list of material third countries includes the Federative Republic of Brazil and no longer includes the Republic of Angola. However, the Banco de Portugal will continue to closely follow developments in several sources of risk related to other exposures, whether direct or indirect, of the Portuguese banking system to the Republic of Angola.

The release of the current list is pursuant to the decision of the Board of Directors of the Banco de Portugal of 16 June 2020, based on results of the assessment exercise to identify material third countries. This exercise is carried out by the Banco de Portugal in compliance with Recommendation of the European Systemic Risk Board ESRB/2015/1 on recognising and setting countercyclical buffer rates for exposures to third countries.

The countercyclical capital buffer is a macroprudential instrument intended to increase resilience of the banking sector against cyclical systemic risk from excessive credit growth in the non-financial private sector. Thus, for the purposes of this assessment, only direct exposures, related to international activity, of the Portuguese banking system to the private non-financial sector in third countries are taken into account. This assessment does not comprise, e.g. direct exposures to public sector entities or financial institutions of third countries or exposures of the Portuguese banking system, via credit granted in Portugal, to non-financial corporations located in Portuguese territory, which carry out relevant activity in third countries. 

The Banco de Portugal will review the list of material third countries annually and publish its decision on its website.