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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: 2021 – 2022

The Banco de Portugal, acting as the Portuguese macroprudential authority, identified the Republic of Mozambique and Macao Special Administrative Region of the People’s Republic of China as material third countries for the purposes of recognising and setting the countercyclical capital buffer rates for exposures to third countries. This decision is valid until June 2022.

The Federative Republic of Brazil has not been identified as a material third country, in contrast with the decision reached in 2020. The Federative Republic of Brazil is considered a material third country in the context of the European Economic Area and, therefore, is monitored by the European Systemic Risk Board (ESRB).

The release of the current list is pursuant to the decision of the Board of Directors of the Banco de Portugal of 22 June 2021, 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 the ESRB’s Recommendation (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 the 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 of the Portuguese banking system to the private non-financial sector in third countries are considered. This assessment does not comprise direct exposures to public sector entities or financial institutions of third countries nor exposures of the Portuguese banking system, via credit granted in Portugal, to non-financial corporations located in Portugal but whose activity is, to some extent, dependent on third countries.

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