The Czech banking sector's ability to deal with potential shocks is strong and banks could cope with a severe recession, the central bank said in a yearly health check of the sector on Tuesday. According to Governor Miroslav Singer in a worst-case scenario only seven banks would fall under the eight percent regulatory minimum and would have to top up their capital by approximately seven billion crowns. Highlighting one potential risk, the bank said in its annual financial stability report it would tighten mortgage lending rules from October due to "highly relaxed" conditions, although it did not assess any overheating in home loans, which have been a strong driver of loan growth in recent years.
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