The Central Bank of Cyprus has introduced a 1% systemic risk buffer (SyRB) for commercial lenders, up from zero. It comes on top of the 1.5% countercyclical capital buffer (CCyB) on domestic risk-weighted assets that has been in place since January 2025.

The decision reflects persistent threats to Cyprus’ financial stability, including global uncertainty, a large banking sector with similar business models, a high concentration of loans backed by property, and growing cybersecurity risks.

Central banker Christodoulos Patsalides had signaled that measures to strengthen financial stability were on the way when he appeared in parliament to present the 2027 budget. He said the way these risks interact, combined with the high concentration of the domestic banking sector, was a central concern for the Central Bank. He told lawmakers the bank would decide by early November whether to activate a systemic risk buffer. That decision has now been made.

The Central Bank already requires a 1.5% CCyB on domestic exposures, equivalent to €230 million in capital requirements. It has also set an additional €440 million in buffer requirements based on the systemic importance of individual credit institutions.

Source: Ekathimerini.com