EBA published an opinion following the notification by DNB of its intention to modify capital requirements to address an increase in the macro-prudential risk in the Netherlands. Based on the evidence submitted by DNB, EBA does not object to the adoption of the proposed measure, which is based on Article 458 (2) of the Capital Requirements Regulation (CRR). This new measure aims to enhance resilience of the Dutch banking sector to a potential severe downturn in the residential real estate market, against the background of sustained price increases in real estate over the past few years.
DNB has notified EBA of its intention to introduce a new macro-prudential measure, which consists of a minimum average risk-weight floor at the portfolio level, based on the loan-to-value (LTV) ratio of the individual loans. As part of this measure, a 12% risk-weight is proposed to be assigned to the portion of the loan not exceeding 55% of the market value of the property that serves to secure the loan and a 45% risk-weight is proposed for to the remaining portion of the loan. If the LTV ratio is lower or equal to 55, then a fixed 12% risk-weight is proposed to be assigned to the loan. In its opinion, addressed to the European Council, EC, and DNB, EBA acknowledges, in line with the ESRB recommendation on medium-term vulnerabilities in the residential real estate sector in the Netherlands, the concerns on build-up of risk in this sector, the large proportion of high-LTV loans, the high level of indebtedness in Dutch households, and the low risk-weights for real estate exposures by Dutch internal ratings-based banks. In light of this conclusion, EBA does not object to the deployment of the proposed macro-prudential measure by DNB.
Keywords: Europe, EU, Netherlands, Banking, LTV, CRR, Residential Real Estate, Regulatory Capital, Macro-Prudential Policy, Internal Ratings Based, EBA, DNB
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.