Featured Product

    ESRB Issues Recommendation on Reciprocation of Macroprudential Actions

    July 01, 2020

    The General Board of ESRB has decided to exclude an Estonian macro-prudential measure related to the systemic risk buffer from the list of macro-prudential policy measures that are recommended to be reciprocated under the Recommendation ESRB/2015/2. In addition, ESRB has amended text related to the reciprocation of certain macro-prudential measures from Belgium, Finland, France, and Sweden. In this context, the Recommendation ESRB/2020/9, which amends Recommendation ESRB/2015/2, has been published in the Official Journal of the European Union.

    On June 24, 2016, Recommendation ESRB/2015/2 (pursuant to the ESRB Recommendation ESRB/2016/4) was amended to recommend the reciprocation of the 1% systemic risk buffer rate applied by the Bank of Estonia (Eesti Pank) to the domestic exposures of all credit institutions authorized in Estonia. On April 06, 2020, Eesti Pank decided to reduce the level of the systemic risk buffer rate to 0%, with effect from May 01, 2020. In response to Eesti Pank’s decision of April 06, 2020, the General Board of ESRB has decided to exclude the Estonian measure from the list of macro-prudential policy measures that are recommended to be reciprocated under Recommendation ESRB/2015/2. Therefore, Recommendation ESRB/2015/2 is being amended accordingly. Another amendment involves the replacement of the Annex of Recommendation ESRB/2015/2 by the Annex of Recommendation ESRB/2020/9. Moreover, Section 1, sub-recommendation C(1), of Recommendation ESRB/2015/2 is being replaced by text that includes the following:

    • Belgium—A risk-weight add-on for retail exposures secured by residential immovable property located in Belgium, applied (in accordance with the Capital Requirements Regulation) to credit institutions authorized in Belgium, using the Internal Ratings-Based, or 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
    • Finland—A 15% floor for the average risk-weight on residential mortgage loans secured by a mortgage on housing units in Finland applied to credit institutions authorized in Finland, using the IRB Approach for calculating regulatory capital requirements
    • France—A tightening of the large exposure limit 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

    The framework on voluntary reciprocity for macro-prudential policy measures, which is set out in Recommendation ESRB/2015/2, aims to ensure that all exposure-based macro-prudential policy measures activated in one member state are reciprocated in the other member states. 

     

    Related Links

    Keywords: Europe, EU, Estonia, Belgium, Finland, France, Sweden, Banking, Systemic Risk, Systemic Risk Buffer, ESRB 2015/2, Reciprocity, Recommendation, ESRB 2020/9, Macro-Prudential Policy, ESRB

    Featured Experts
    Related Articles
    News

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News
    News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    News

    MFSA Sets Out Supervisory Priorities, Issues Reporting Updates

    The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023

    March 02, 2023 WebPage Regulatory News
    News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News
    News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8804