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
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks.