Central Bank of Kuwait introduces stimulus measures to support banking sector stability
The Central Bank of Kuwait has issued Circular No. 2/R B/R BA/619/2026 dated 26 March 2026, introducing temporary measures relating to liquidity and capital adequacy requirements. These measures are aimed at mitigating the impact of ongoing geopolitical developments and supporting banking sector stability.
Key Measures
The circular introduces a number of adjustments to regulatory thresholds, including:
- Reducing the minimum Liquidity Coverage Ratio (LCR) from 100% to 80%.
- Reducing the minimum Net Stable Funding Ratio (NSFR) from 100% to 80%
- Reducing the Regulatory Liquidity Ratio (RLR) from 18% to 15%
- Widening the permitted cumulative negative gap under the maturity mismatch ladder
- Increasing the cap on available financing (MLL) from 90% to 100%
- Releasing 1% of the capital conservation buffer in the form of CET1, reducing the overall capital adequacy requirement from 13% to 12%
These measures provide banks with greater balance sheet flexibility while supporting economic continuity and financial stability.
Practical Considerations for Financial Institutions
Financial institutions should consider how these temporary adjustments affect internal liquidity management, capital planning, and compliance frameworks. In particular, banks should assess how the revised thresholds interact with existing regulatory obligations and internal risk parameters.
How ASAR Can Help
ASAR’s Banking and Finance team is closely monitoring regulatory developments and market conditions affecting the banking sector in Kuwait. We advise lenders, borrowers, and financial institutions on regulatory developments and compliance requirements, and assist clients in navigating evolving market conditions.
For further assistance, please contact ASAR Kuwait at asar@asarlegal.com
