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
Keywords: Europe, Belgium, Finland, France, Sweden, Banking, Systemic Risk, ESRB/2015/2, Reciprocity, Recommendation, ESRB/2020/16, Macro-Prudential Policy, Regulatory Capital, Basel, ESRB
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.