Featured Product

    CBM Notifies ESRB and ECB on Imposing Borrower-Based Measures in Malta

    May 17, 2019

    CBM notified ESRB and ECB regarding its decision to impose borrower-based measures on lenders in Malta. This macro-prudential measure, which is covered in Directive No. 16 of CBM, will differentiate between two categories of borrowers—Category I and Category II borrowers. The Directive shall apply to all lenders granting domestic residential real estate (RRE) loans. This Directive shall enter into force on July 01, 2019.

    The objective of the Directive is to strengthen the resilience of lenders and borrowers against the potential build-up of vulnerabilities, which could result in financial losses both to lenders and borrowers stemming from potential unfavorable economic developments. This objective is achieved by setting limits on Loan-to-Value Ratio at Origination (LTV-O), Debt Service to Income Ratio at Origination (DSTI-O) and maturities—thereby preserving sound and prudent lending standards. Loans of Category I Borrowers with a collateral market value below EUR 175,000 (excluding haircuts) are exempted from the LTV-O and DSTI-O limits specified in this Directive. Loans falling below this threshold are still subject to prudent lending policies in terms of the MFSA notice on the management of credit risk by credit institutions authorized under the Banking Act 1994 (BN/01/2002). The maturity limits apply for all new RRE loans. Lenders may implement tighter credit standards than those established in CBM Directive No.16.

    For Category I Borrowers (for loans with a collateral market value exceeding EUR 175,000), the following caps shall apply:

    • 90% LTV-O with a "speed limit" of 10% on the volume of loans
    • 40% Stressed DSTI-O with a shock to interest rates of 150 bps
    • 40 years maturity cap or the official retirement age – whichever occurs first

    For Category II borrowers, the following limits shall apply:

    • Gradual LTV-O phase-in—with 85% LTV-O cap, in the first year, with a "speed limit" of 20% on the volume of loans; and 75% LTV-O cap, in the years after, with a "speed limit" of 20% on the volume of loans
    • 40% Stressed DSTI-O with a shock to interest rates of 150 bps
    • Twenty-five-year maturity cap or the official retirement age—whichever occurs first

     

    Related Links

    Effective Date: July 01, 2019

    Keywords: Europe, EU, Malta, Banking, Borrower-Based Measure, Macro-Prudential Measures, LTV, DSTI, Residential Real Estate, ECB, Central Bank of Malta, ESRB

    Related Articles
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    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.

    September 15, 2021 WebPage Regulatory News
    News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News
    News

    FDIC Announces Winners of Tech Sprint to Reach Unbanked Consumers

    The tech lab of the Federal Deposit Insurance Corporation (FDIC) selected three winning teams in a tech sprint designed to explore new technologies and techniques to help banks meet the needs of unbanked consumers.

    September 13, 2021 WebPage Regulatory News
    News

    MAS Consults on Capital and Reporting Requirements for Market Risk

    The Monetary Authority of Singapore (MAS) launched a consultation on the standards for market risk capital and the associated reporting requirements for banks incorporated in Singapore.

    September 13, 2021 WebPage Regulatory News
    News

    PRA Letter Sets Out Findings on Reliability of Regulatory Reporting

    PRA published a "Dear CEO" letter that sets out findings of a review on the reliability of regulatory reporting and reiterates the supervisory expectations on regulatory reporting.

    September 10, 2021 WebPage Regulatory News
    News

    APRA Connect to Go Live; APRA to Reduce Reliance on CLF

    The Australian Prudential Regulation Authority (APRA) confirmed that its new data collection solution APRA Connect will go live on September 13, 2021.

    September 10, 2021 WebPage Regulatory News
    News

    FED Paper Explores Fintech Partnership Dynamics in Community Banks

    The Federal Reserve System (FED) published a paper describing the landscape of partnerships between community banks and fintech companies.

    September 09, 2021 WebPage Regulatory News
    News

    FDIC Selects Four Vendors for Next Phase of Rapid Prototyping Pilot

    The Federal Deposit Insurance Corporation (FDIC) has chosen four companies—Novantas Inc, Palantir Technologies Inc, PeerIQ, and S&P Global Market Intelligence LLC—to propose a pilot consisting of testing new reporting and analytical tools with a small group of FDIC-supervised institutions on a voluntary basis.

    September 09, 2021 WebPage Regulatory News
    News

    PRA Consults on Requirements to Identify Material Risk-Takers

    The Prudential Regulatory Authority (PRA), via the consultation paper CP18/21, proposed changes to the applicable requirements on the identification of material risk-takers for the purposes of the remuneration regime.

    September 08, 2021 WebPage Regulatory News
    News

    ESA Report Points to Elevated Credit and Cyber Risks in Wake of Crisis

    The Joint Committee of European Supervisory Authorities (ESAs) published its second 2021 joint risk assessment report for the financial sector.

    September 08, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7461