Featured Product

    ESRB Issues Opinion on Stricter Macro-Prudential Measure by Sweden

    June 27, 2018

    ESRB published its opinion on the Swedish notification of a stricter national measure on prudential requirements for credit institutions and investment firms, based on Article 458 of the Capital Requirements Regulation (CRR or EU Regulation No 575/2013). The measure implies an average risk-weight floor of 25% on the Swedish mortgage exposure portfolios of the internal ratings-based (IRB) banks. ESRB opines that the stricter measure is justified, suitable, proportionate, effective, and efficient.

    Finansinspektionen, acting as designated authority for the purpose of Article 458 of CRR, notified ESRB) on May 24, 2018 of its intention to apply a stricter national measure for credit institutions using the internal ratings-based (IRB) approach. The draft stricter national measure concerns risk-weights for targeting asset bubbles in the residential property sector. It consists of the imposition, on all domestic IRB credit institutions, of a credit institution-specific minimum level (floor) of 25% for the exposure-weighted average risk-weight on retail exposures in Sweden secured by immovable property. The draft stricter national measure should come into force on December 31, 2018. To assess the draft stricter national measure notified by Finansinspektionen, the ESRB assessment team referred to in Decision ESRB/2015/4 issued an assessment note.

    ESRB believes that the announced structural changes in the Swedish banking sector may reduce the effectiveness of macro-prudential instruments currently in force in Sweden, in particular the macro-prudential use of Pillar 2, which can lead to changes in the intensity of macro-prudential or systemic risks arising from the residential real estate sector of such nature as to pose risk to financial stability at national level. The draft stricter national measure does not entail disproportionate adverse effects on the whole or parts of the financial system in other member states or in EU; the issue concerns only one member state. The risks will not be addressed by other measures in CRR or CRD IV. The draft stricter national measure does not have a negative impact on the internal market that outweighs the financial stability benefits resulting in a reduction of the macro-prudential or systemic risks identified.

     

    Related Links

    Keywords: Europe, Sweden, Banking, Macro-prudential Policy, IRB Approach, Mortgage Exposure, CRR, Systemic Risk, ESRB

    Featured Experts
    Related Articles
    News

    HKMA on Fintech Adoption and Innovation by Banks in Hong Kong

    HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.

    May 20, 2020 WebPage Regulatory News
    News

    BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk

    BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guide for Managing Climate and Environmental Risks

    ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis

    ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.

    May 20, 2020 WebPage Regulatory News
    News

    EBA Assesses Interlinkages Between Recovery and Resolution Planning

    EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).

    May 20, 2020 WebPage Regulatory News
    News

    SRB Publishes Final MREL Policy Under the Banking Package

    SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.

    May 20, 2020 WebPage Regulatory News
    News

    US Agencies Amend Interim Final Rule on Transition Period for CECL

    US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.

    May 19, 2020 WebPage Regulatory News
    News

    ECB Releases Results of March Survey on Credit Terms and Conditions

    ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.

    May 19, 2020 WebPage Regulatory News
    News

    FINMA Adjusts Deadlines for COVID-19 Relief Measures for Banks

    FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.

    May 19, 2020 WebPage Regulatory News
    News

    SRB Consults on Standardized Data Set for Bank Valuation in Resolution

    SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5203