Featured Product

    ESRB Recommends Reciprocation of Certain Macro-Prudential Measures

    February 08, 2021

    ESRB published recommendations on the reciprocation of macro-prudential measures in Belgium, Finland, France, and Sweden. The General Board of ESRB decided to exclude the Finnish macro-prudential measure for risk-weight on residential mortgage loans from the list of macro-prudential policy measures that are recommended to be reciprocated in Recommendation ESRB/2015/2. ESRB also amended text on the reciprocation of certain macro-prudential measures from Belgium, France, and Sweden. In this context, the Recommendation ESRB/2020/16, which amends Recommendation ESRB/2015/2, has been published in the Official Journal of the European Union. Recommendation ESRB/2020/16 entered into force on January 01, 2021.

    On January 08, 2018, the Recommendation ESRB/2015/2 (pursuant to Recommendation ESRB/2018/1) was amended to recommend the reciprocation of a 15% floor for the average risk-weight on residential mortgage loans secured by a mortgage on housing units in Finland. This measure was applied by FIN-FSA in accordance with the Capital Requirements Regulation or CRR, to the Finland-authorized credit institutions that use the internal ratings-based, or IRB, approach to calculate regulatory capital requirements. On September 30, 2020, FIN-FSA decided not to renew the risk-weight floor from December 31, 2020. In tandem with this FIN-FSA decision, the General Board of ESRB has decided to exclude the Finnish measure from the list of macro-prudential policy measures that are recommended for reciprocation under the Recommendation ESRB/2015/2. Therefore, the Recommendation ESRB/2015/2 has been amended accordingly. To this end, the Annex of Recommendation ESRB/2020/16 replaces the Annex of the Recommendation ESRB/2015/2.

    Moreover, the Recommendation ESRB/2020/16 replaces Section 1, sub-recommendation C(1), of the Recommendation ESRB/2015/2 with respect to the following:

    • Belgium—A risk-weight add-on for retail exposures secured by residential immovable property located in Belgium, applied (in accordance with the CRR) to credit institutions authorized in Belgium, using the IRB, Approach for calculating regulatory capital requirements and composed of a flat risk-weight add-on of 5 percentage points and a proportionate risk-weight add-on consisting of 33% of the exposure-weighted average of the risk-weights applied to the portfolio of retail exposures secured by residential immovable property located in Belgium
    • France—A tightening of the large exposure limit provided for in CRR, applicable to exposures to highly indebted large non-financial corporations having their registered office in France to 5% of eligible capital, applied to global systemically important institutions (G-SIIs) and other systemically important institutions (O-SIIs) at the highest level of consolidation of their banking prudential perimeter
    • Sweden—A credit institution-specific floor of 25% for the exposure-weighted average of the risk-weights applied to the portfolio of retail exposures to obligors residing in Sweden, secured by immovable property in accordance with CRR to credit institutions authorized in Sweden using the IRB Approach for calculating regulatory capital requirements

     

    Related Links

    Keywords: Europe, Belgium, Finland, France, Sweden, Banking, Systemic Risk, ESRB/2015/2, Reciprocity, Recommendation, ESRB/2020/16, Macro-Prudential Policy, Regulatory Capital, Basel, ESRB

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582