Featured Product

    FI Publishes Regulatory Updates for Banks and Investment Firms

    August 03, 2021

    The Swedish Financial Supervisory Authority (FI) has updated the lists of deactivated EBA validation rules for periodic reporting (via Fidac) for banks and investment firms. FI also updated the method for assessing flowback risks associated with securitization for individual banks. FI has published a memorandum assessing that a bank, in addition to its contractual obligations, in most cases will offer financing to borrowers whose credits can no longer be financed through a securitization.

    FI notes that support measures for borrowers that give rise to flowback risks are not covered by the existing capital requirements and, thus, it takes the position that risks associated with securitization for individual banks are also not fully covered by existing capital requirements. The updated method to assess flowback risks associated with securitization will be applied to banks that perform traditional and synthetic securitizations, where the terms for the transfer of significant credit risk to a third-party are viewed to be met. Securitizations that are judged to entail low flowback risks will be exempt from the method. The method will be applied to banks where the flowback risk in an overall capital assessment is judged to be material. FI makes the assessment that this will initially apply to banks in Supervision Categories 1 and 2. In exceptional cases, it may also apply to banks in Supervision Categories 3 and 4 after a separate assessment. FI intends to decide on an additional own funds requirement for flowback risks associated with securitization if at least one of the two following conditions are met:

    • Bank's total capital ratio decreases by at least 50 basis points during a future twelve-month period as a result of the flowback
    • Exposure amount for the bank's securitized credits exceeds 15% of the bank's total exposures amount in relevant exposures classes

    This memorandum addressing flowback risk replaces the 2017 memorandum on Pillar 2 capital assessment method for systemic risk associated with securitizations. In the 2017 memorandum, FI described how securitizations, given certain conditions, could introduce systemic risks associated with securitizations that are not covered by Pillar 1.

     

    Related Links (in English and Swedish)

    Keywords: Europe, Sweden, Banking, Securities, Validation Rules, Fidac, Securitization, Flowback Risk, Regulatory Capital, Pillar 2, Investment Firms, Reporting, Credit Risk, FI

    Featured Experts
    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206