Featured Product

    ESRB Issues Recommendation on Reciprocation of Macroprudential Actions

    July 01, 2020

    The General Board of ESRB has decided to exclude an Estonian macro-prudential measure related to the systemic risk buffer from the list of macro-prudential policy measures that are recommended to be reciprocated under the Recommendation ESRB/2015/2. In addition, ESRB has amended text related to the reciprocation of certain macro-prudential measures from Belgium, Finland, France, and Sweden. In this context, the Recommendation ESRB/2020/9, which amends Recommendation ESRB/2015/2, has been published in the Official Journal of the European Union.

    On June 24, 2016, Recommendation ESRB/2015/2 (pursuant to the ESRB Recommendation ESRB/2016/4) was amended to recommend the reciprocation of the 1% systemic risk buffer rate applied by the Bank of Estonia (Eesti Pank) to the domestic exposures of all credit institutions authorized in Estonia. On April 06, 2020, Eesti Pank decided to reduce the level of the systemic risk buffer rate to 0%, with effect from May 01, 2020. In response to Eesti Pank’s decision of April 06, 2020, the General Board of ESRB has decided to exclude the Estonian measure from the list of macro-prudential policy measures that are recommended to be reciprocated under Recommendation ESRB/2015/2. Therefore, Recommendation ESRB/2015/2 is being amended accordingly. Another amendment involves the replacement of the Annex of Recommendation ESRB/2015/2 by the Annex of Recommendation ESRB/2020/9. Moreover, Section 1, sub-recommendation C(1), of Recommendation ESRB/2015/2 is being replaced by text that includes the following:

    • Belgium—A risk-weight add-on for retail exposures secured by residential immovable property located in Belgium, applied (in accordance with the Capital Requirements Regulation) to credit institutions authorized in Belgium, using the Internal Ratings-Based, or IRB, Approach for calculating regulatory capital requirements and composed of a flat risk-weight add-on of 5 percentage points and a proportionate risk-weight add-on consisting of 33% of the exposure-weighted average of the risk-weights applied to the portfolio of retail exposures secured by residential immovable property located in Belgium
    • Finland—A 15% floor for the average risk-weight on residential mortgage loans secured by a mortgage on housing units in Finland applied to credit institutions authorized in Finland, using the IRB Approach for calculating regulatory capital requirements
    • France—A tightening of the large exposure limit applicable to exposures to highly indebted large non-financial corporations having their registered office in France to 5% of eligible capital, applied to global systemically important institutions (G-SIIs) and other systemically important institutions (O-SIIs) at the highest level of consolidation of their banking prudential perimeter
    • Sweden—A credit institution-specific floor of 25% for the exposure-weighted average of the risk weights applied to the portfolio of retail exposures to obligors residing in Sweden secured by immovable property in accordance with CRR to credit institutions authorized in Sweden using the IRB Approach for calculating regulatory capital requirements

    The framework on voluntary reciprocity for macro-prudential policy measures, which is set out in Recommendation ESRB/2015/2, aims to ensure that all exposure-based macro-prudential policy measures activated in one member state are reciprocated in the other member states. 

     

    Related Links

    Keywords: Europe, EU, Estonia, Belgium, Finland, France, Sweden, Banking, Systemic Risk, Systemic Risk Buffer, ESRB 2015/2, Reciprocity, Recommendation, ESRB 2020/9, Macro-Prudential Policy, ESRB

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301