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

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8179