Scope Ratings looked at the recent communications on capital buffers by the Bank of Spain, as well as banks' disclosure of their Pillar 2 requirements. The Bank of Spain set the countercyclical buffer for 2016 at 0%, and it communicated systemic buffers ranging from 0% to 0.25% for the same year. A buffer of 2.5% for capital conservation was included in the banks’ Pillar 2 requirement as were additional requirements for bank-specific risks.

In Scope’s view, the recent disclosures add significant visibility over distributions, including coupons of AT1 securities. “With current buffers known, reasonable confidence on their expected increase over the next three years and good visibility on the SREP capital results, banks can now plan their distribution policies with more certainty,” says Marco Troiano, author of the report.

Commenting on the first-time disclosure of Pillar 2 requirements in Spain, the agency noted that Spanish banks’ disclosure follows an emerging standard for transparency, which Scope views very positively.

Download the full report: 'Spanish Banks' Capital Regime: More Clarity Entering 2016'.