MADRID, May 16 (Reuters) -

Spanish lenders, such as Santander and BBVA , will need to set aside extra cash to cover systemic risks, the Spanish central bank said on Thursday.

The central bank plans to set a countercyclical capital buffer of 0.5% for Spanish banks to cover potential systemic risks in the fourth quarter, making it effective beginning Oct. 1, 2025. The countercyclical buffer is currently set at 0%.

The buffer seeks to mitigate or prevent risks caused by excessive growth in aggregate credit by requiring lenders to build insurance reserves during times of strong growth. This would then be available during downturns.

Such capital reserves, known as "macroprudential" buffers because they do not address risk factors for individual banks, can be released at times of stress.

Until now, the buffer was only activated when risks were high, but now it will be applied when risks are at an intermediate level as they currently are, Bank of Spain Governor Pablo Hernandez de Cos told reporters on Thursday.

"Next year if the circumstances remain the same it will be increased again by another 0.5%," De Cos said.

"This is the decision we are taking today with the information we have today," De Cos added.

Taking current Spanish banks' overall capital, banks will have to set aside around 7.5 billion euros in extra money when the buffer is raised to 1% to cover potential fallout, such as an increase in bad loans in an uncertain economic environment. The capital buffer is activated when Spanish banks start booking record profits.

Lenders such as Sabadell, the target of a hostile takeover bid by BBVA, have said that a potential 50 points increase in the countercyclical buffer would represent an impact of 30 basis points on its capital requirement and would be manageable. (Reporting by Jesús Aguado; Writing by Emma Pinedo, editing by Inti Landauro and Bernadette Baum)