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
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
CFTC Amends Position Limit Rules for Security Futures ProductsRelated Articles
EBA Updates List of Validation Rules for Reporting by Banks
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS Advocates Environmental Risk Analysis for Financial Sector
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS Issues Guidelines to Promote Senior Management Accountability
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA Formalizes Capital Treatment and Reporting of COVID-19 Loans
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB Chair Discusses Path to Harmonized Liquidation Regime for Banks
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB Updates List of Supervised Entities in EU in September 2020
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI Identifies Focus Areas to Strengthen Third-Party Risk Management
OSFI published the key findings of a study on third-party risk management.
FSB Extends Implementation Timeline for Framework on SFTs
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.
