ESRB Welcomes FIN-FSA Decision to Extend Stricter Measure Under CRR
ESRB published an opinion and an assessment on the notification of FIN-FSA on the extension of the period of application of a stricter national measure on residential real estate lending, under Article 458 of the Capital Requirements Regulation or CRR (EU No 575/2013). The stricter national measure consists of a credit-institution-specific minimum level of 15% for the average risk-weight on housing loans of credit institutions that have adopted the internal ratings-based (IRB) approach. FIN-FSA had informed ESRB on June 28, 2019 about its decision to extend this measure and the extension will apply from January 01, 2020 until December 31, 2020.
ESRB welcomes this one-year extension and considers that the key vulnerabilities in the residential real estate (RRE) sector in Finland are related to elevated and rising household indebtedness, the significant proportion of housing loans in the portfolio of Finnish credit institutions, the high growth in indirect real estate lending to households through housing company loans, the easing of lending standards for new loans, and the interconnectedness with the rest of the Nordic banking system. Overall, ESRB considers that extending the measure would not entail disproportionate adverse effects for the Internal Market or other financial systems. The extension would continue to prevent a decline in the risk-weights applied by Finnish IRB credit institutions to the portfolio of housing loans and its further deviation from the levels applied in other member states. Also, keeping the risk-weight floor relatively low compared with that in other EU member states should not have a disproportionate adverse effect on the Single Market and could even be seen as leveling the playing field to some degree.
Related Links
Keywords: Europe, Finland, Banking, CRR, IRB Approach, Systemic Risk, Residential Real Estate, Macro-Prudential policy, Risk Weight, Credit Risk, FIN-FSA, 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
EC Statement on Cybersecurity Act and Certification Rules in EURelated Articles
PRA and FPC Finalize Changes to Leverage Ratio Framework in UK
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
CFPB Proposes Rule on Small Business Lending Data Collection
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
PRA Decides to Maintain O-SII Buffers for Another Year
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
FSB Report Assesses Implementation of Recommendations on Stablecoins
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
APRA Updates Loan Serviceability Expectations for Home Lending
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
EBA and EIOPA Set Out Work Priorities for 2022
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
MFSA Issues Reporting Updates and Guidance for Banks
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
EC Publishes Decision on List of Equivalent Third Countries Under CRR
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC Rule on Contractual Recognition of Write-Down and Conversion Powers
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.
