The Central Bank of Oman has issued rules for countercyclical buffers in a circular dated December 30. The Omani regulator said that minimum capital requirements for banks would increase by 0.625%, which is part of a package of rules related to Basel III. That would require Omani banks to hold a Common Equity Tier 1 (CET1) ratio of 8.25% and a CAR of 13.25%, up from 7.625% and 12.625%, respectively. While the central bank said the rules would not be invoked until a date to be announced later, commercial banks must be ready as of January 1, 2016, to implement the new ratios. Furthermore increases of 0.625% are due to be made annually until they reach a total of 2.5% in 2019. Whenever the central bank initiates the new rules, banks will be obliged to apply the full buffer at that date. Countercyclical buffers are designed to ensure that banks build up capital when lending is growing; it then can be drawn upon when/if the economy slows and some loans sour without hurting the bank's solvency. The new rules exclude the Islamic banking windows set up by many Omani lenders in recent years, which must comply with different capital requirements. (Reuters)