Featured Product

    EBA Issues Opinion on Extension of Swedish Macro-Prudential Measure

    October 28, 2021

    The European Banking Authority (EBA) published an opinion in response to a notification of the Swedish Financial Supervisory Authority (Finansinspektionen or FI) on its intention to extend a regulatory measure. This measure, which was originally introduced in 2018 and extended in 2020, entails a credit institution-specific minimum level of 25% for the average risk-weight on Swedish housing loans applicable to Swedish credit institutions that have adopted the internal ratings-based (IRB) approach. In its Opinion—which is addressed to the European Council, the European Commission, and the Swedish Authorities and is based on the evidence submitted—EBA does not object to the two-year extension of the application period for this measure.

    This risk-weight floor is intended to capture the credit loss risk of Swedish mortgages in a severe downturn scenario and to account for the broader systemic risks that could arise from the Swedish mortgages of individual credit institutions. EBA emphasized that such a measure has been in place since 2014 in different forms. FI's concern on indebtedness and dynamics built up in the market has been articulated over many years and tends to be permanent and not cyclical. EBA invites FI to reassess the rationale for the measure in light of the currently available and forthcoming instruments, which could be more targeted to, or compensate for, the risk as it appears to be a structural feature of the Swedish housing market. EBA also expressed a concern that the design of the risk-weight floor includes all retail exposures secured by real estate, for both small and medium enterprises (SMEs) and non-SMEs. The inclusion of SME exposures secured by real estate can be inferred from the reference to COREP and the rationale for this requires more explanation. EBA opines that it is important to monitor the impact of this measure on lending to SMEs and to intervene in the event that there are unintended consequences. EBA strongly encourages FI to undertake a comprehensive and thorough assessment in respect of the underlying causes and drivers. In its Opinion, EBA takes note of the FI concerns regarding systemic risk for the housing market and welcomes the ongoing review of IRB models through bottom-up repair measures and acknowledges the time horizon for carrying out such work. 

     

    Related Links

    Keywords: Europe, EU, Sweden, Banking, Regulatory Capital, Systemic Risk, Pillar 2, Macro-Prudential Policy, IRB Approach, Credit Risk, Basel, Lending, SMEs, EBA

    Featured Experts
    Related Articles
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8179