The Bank of Portugal has decided to keep unchanged its 4% sectoral systemic risk buffer applying to institutions using the internal ratings-based (IRB) approach on retail exposures to natural persons secured by residential real estate located in Portugal. The buffer was introduced on 15 November 2023 and has been in force since 1 October 2024. The decision follows the Bank of Portugal’s assessment of the measure’s effectiveness and a finding of no material changes in the underlying context. The European Central Bank was notified and did not object, the National Council of Financial Supervisors was consulted, and a prior hearing of interested parties was conducted under the Portuguese Code of Administrative Procedure. The Bank of Portugal reiterated that the buffer is intended as a preventive resilience measure and could be released if systemic risk in the Portuguese residential real estate market materialises, with IRB institutions representing a substantial share of mortgage lending and applying relatively low risk weights compared with the standardised approach. The Bank of Portugal said it will indicate the timeframe during which an increase in the buffer is not expected.
Bank of Portugal 2025-11-17
Bank of Portugal maintains 4% sectoral systemic risk buffer for IRB residential real estate exposures
The Bank of Portugal has maintained its 4% sectoral systemic risk buffer for institutions using the internal ratings-based approach on retail exposures to residential real estate in Portugal. This decision follows an assessment of the buffer's effectiveness and consultation with relevant authorities, including the European Central Bank. The buffer serves as a preventive measure, with potential adjustments if systemic risk in the real estate market arises.