Santiago, 26 May 2023 – The Finance and Capital Markets Committee of the British Chamber of Commerce (Britcham) held a highly informative meeting on May 26 at 09:00 hrs, featuring esteemed guest speaker Marco Núñez. The meeting focused on the objectives and effects of the activation of the countercyclical capital buffer (CCB), a crucial topic in the current economic landscape.
Marco Núñez, Senior Manager of Risk & Regulatory Services at PwC Chile, shared his insights and expertise on the unexpected activation of the CCB by the Central Bank. The measure, set at a level of 0.5% of risk-weighted assets, is expected to be enforceable within a year. Núñez provided valuable analysis on the reasons behind this decision and its potential impact on the economy.
The meeting was moderated by Pierre Julien Loriquet, Head of Wholesale Banking at HSBC and President of the Finance Committee. With over 20 members in attendance, including finance professionals, industry leaders, and experts in the field, such as Andre Kommander, CFO, HSBC Chile, the discussion proved to be an engaging and insightful exchange of ideas.
During the meeting, Núñez highlighted that the activation of the CCB was surprising for the market, as the purpose of the buffer is typically to be activated during periods of economic expansion. He emphasised the importance of considering the persistent macroeconomic imbalances and the current state of economic activity in making this decision.
Núñez also shed light on the challenges that the banking sector may face as a result of this measure. Banks will need to assess their capitalization margins in the short and medium term to ensure compliance with the CCB requirements. In the long term, the complete implementation of Basel III requirements, along with the activation of the CCB, may prompt banks, particularly systemic institutions, to redefine risk appetites, business models, and implement advanced measurement approaches for greater capital efficiency.
Furthermore, Núñez discussed the potential effects of the CCB activation on the economy and the banking sector. He mentioned that the increase in capital requirements could impact loan interest rates. However, the expected trajectory of the Monetary Policy Rate (MPR), with consensus suggesting a decrease in inflationary pressures, could offset the increased costs associated with the CCB activation.
The conversation provoked a lively Q&A session, allowing committee members to further delve into the intricacies of the topic and seek clarification from the guest speaker.
Britcham’s Finance and Capital Markets Committee is committed to fostering a deeper understanding of key financial topics and their impact on the business community. The engagement and participation of industry experts, such as Marco Núñez, play a vital role in providing valuable insights to its members.