EBA published an opinion following the notification by DNB of its intention to modify capital requirements to address an increase in the macro-prudential risk in the Netherlands. Based on the evidence submitted by DNB, EBA does not object to the adoption of the proposed measure, which is based on Article 458 (2) of the Capital Requirements Regulation (CRR). This new measure aims to enhance resilience of the Dutch banking sector to a potential severe downturn in the residential real estate market, against the background of sustained price increases in real estate over the past few years.
DNB has notified EBA of its intention to introduce a new macro-prudential measure, which consists of a minimum average risk-weight floor at the portfolio level, based on the loan-to-value (LTV) ratio of the individual loans. As part of this measure, a 12% risk-weight is proposed to be assigned to the portion of the loan not exceeding 55% of the market value of the property that serves to secure the loan and a 45% risk-weight is proposed for to the remaining portion of the loan. If the LTV ratio is lower or equal to 55, then a fixed 12% risk-weight is proposed to be assigned to the loan. In its opinion, addressed to the European Council, EC, and DNB, EBA acknowledges, in line with the ESRB recommendation on medium-term vulnerabilities in the residential real estate sector in the Netherlands, the concerns on build-up of risk in this sector, the large proportion of high-LTV loans, the high level of indebtedness in Dutch households, and the low risk-weights for real estate exposures by Dutch internal ratings-based banks. In light of this conclusion, EBA does not object to the deployment of the proposed macro-prudential measure by DNB.
Keywords: Europe, EU, Netherlands, Banking, LTV, CRR, Residential Real Estate, Regulatory Capital, Macro-Prudential Policy, Internal Ratings Based, EBA, DNB
The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.
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.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
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.
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.
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
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.