CMF Amends Rule on Use of Surplus Mortgage Collateral in SME Loans
CMF has published amendments to Chapter B-1 of the Compendium of Accounting Standards to enable the use of excess home mortgage collateral in the standard mortgage portfolio provisioning model as a mitigating factor in the standard group business model. The amended regulation allows financial institutions to use surplus housing mortgage collateral as a safeguard for commercial loans aimed at small and medium enterprises (SMEs). The regulatory proposal on the amendments to Chapter B-1 of Compendium of Accounting Standards was in consultation between April 13, 2020 and April 24, 2020. CMF has also released a regulatory report that evaluates the impact of this regulatory proposal.
Chapter B-1 of the Compendium of Accounting Standards for banks establishes standardized methodologies for calculating credit risk provisions for the home mortgage portfolio and the group commercial portfolio. Currently, these methodologies do not allow the use of mortgage guarantees associated with home loans in determining the debt-guarantee ratio and the computation of the respective provisions in the group commercial portfolio. Considering the effects of the COVID-19 pandemic, CMF has resolved to review the aforementioned restriction, allowing the recognition of the excess of mortgage guarantee associated with home loans in the standard provisioning model of the group commercial portfolio in Chapter B-1.
Related Links
- Press Release (in English)
- Circular on Amendments (PDF in Spanish)
- Resolution N° 2923 (PDF in Spanish)
- Regulatory Treatment of Collateral (PDF in Spanish)
Keywords: Americas, Chile, Banking, COVID-19, Credit Risk, SME, RRE, Residential Real Estate, Basel III, CMF
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
Regulators and Private Sector Meet to Discuss COVID Policy ResponsesRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
