ESRB Amends Recommendation Related to Macro-Prudential Policy Measures
ESRB published the Recommendation ESRB/2019/1, which amends Recommendation ESRB/2015/2 on the assessment of cross-border effects of, and voluntary reciprocity for, macro-prudential policy measures. To ensure effective and consistent national macro-prudential policy measures, it is important to complement the mandatory reciprocity required under Union law with voluntary reciprocity. The framework on voluntary reciprocity for macro-prudential policy measures 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.
In April 2018, in accordance with Article 133(10)(b) of Capital Requirements Directive (CRD IV: Directive 2013/36/EU), Bank of Estonia reviewed the systemic risk buffer and reset the systemic risk buffer rate applicable to the domestic exposures of all credit institutions authorized in Estonia at 1%. Following the request by Bank of Estonia to ESRB, the General Board of ESRB has decided to recommend a maximum materiality threshold of EUR 250 million of exposures located in Estonia to steer the application of the de minimis principle by the reciprocating member state to the reciprocation of the 1% systemic risk buffer set by Estonia, which was recommended for reciprocation by ESRB pursuant to Recommendation ESRB/2016/4.
Furthermore, from December 31, 2018, credit institutions authorized in Sweden and using the Internal Ratings Based Approach for calculating regulatory capital requirements are subject to 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. Following the request by Financial Supervisory Authority in Sweden (Finansinspektionen) to ESRB, the General Board of ESRB has decided to include this measure in the list of macro-prudential policy measures that are recommended to be reciprocated under Recommendation ESRB/2015/2. The General Board of ESRB has also decided to recommend a maximum materiality threshold of SEK 5 billion of exposures to obligors residing in Sweden secured by immovable property to steer the application of the de minimis principle by the reciprocating member state. Therefore, Recommendation ESRB/2015/2 has been amended as follows:
- In Section 1, sub-recommendation C(1) has been replaced.
- Annex to Recommendation ESRB/2015/2 has been replaced by Annex to Recommendation ESRB/2019/1.
Related Links
Keywords: Europe, EU, Sweden, Estonia, Banking, Macro-Prudential Policy Measures, ESRB/2019/1, ESRB/2015/2, Voluntary Reciprocity, Systemic Risk Buffer, CRD IV, ESRB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
APRA Releases Results of Climate Risk Survey on Regulated EntitiesRelated Articles
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
BoE Announces Changes to Validation Rules for Form BTL
The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.
BCBS Proposes Changes to Process for Reviewing G-SIB Methodology
The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.
