FI Issues Regulatory Updates for Banks and Investment Firms
The Swedish Financial Supervisory Authority (FI) has updated validation rules for reporting according to the EBA taxonomy via the new reporting system Fidac. Also updated was the list of deactivated EBA validation rules for periodic reporting via Fidac for banks and investment firms. FI has decided to reciprocate the decision of the Norwegian Ministry of Finance to implement an average risk-weight floor of 20% for retail exposures and of 35% for corporate exposures collateralized by real estate in Norway; the decision shall apply from September 30, 2021 until December 31, 2022.
The decision is applicable for Swedish credit institutions that have branches or other exposures in Norway and are authorized to use an internal ratings-based approach for the calculation of their capital requirement for credit risks. FI will apply the threshold of NOK 32.3 billion for retail exposures collateralized by real estate and NOK 6.7 billion for corporate exposures collateralized by real estate, as stated by the Norwegian Ministry of Finance. Given the measures being decided now, the existing Pillar 2 add-on for Norwegian mortgages that was previously communicated in a memorandum will no longer be applied by FI as of September 30, 2021. FI is postponing its decision on reciprocating the Norwegian systemic risk buffer of 4.5% for Norwegian exposures until more information is available on how the fifth Capital Requirements Directive (CRD5) will be implemented in Norway.
Finally, FI issued a statement on classification of small and non-complex institutions. The amendments to the Capital Requirements Regulation (CRR) that certain credit institutions and securities companies may be classified as small and non-complex institutions came into effect on June 28, 2021. A company that wants to be classified as a small and non-complex institution must submit a report to FI, wherein the company must state how it fulfills the required conditions in CRR. FI may make a different assessment of the classification if an analysis of the size, connections, complexity. or risk profile shows that the company cannot be considered as such an institution. A small and non-complex institution may be authorized to apply a simplified calculation of the net stable funding ratio (NSFR). An undertaking wishing to apply simplified NSFR is required to submit a separate application for authorization under Article 428a of CRR. It is the company's responsibility to continuously ensure that it meets the conditions for classification as a small and non-complex institution. The company must inform FI if it no longer meets these conditions.
Related Links (in Swedish)
- News Release on Validation Rules
- Validation Rules for Banks
- Validation Rules for Investment Firms
- News Release on Size Classification
- News Release on Risk-Weight Floor (in English)
- Decision on Risk-Weight Floor (in English)
Effective Date: September 30, 2021 (Risk-Weight Decision)
Keywords: Europe, Sweden, Banking, Securities, Investment Firms, Reporting, Validation Rules, FIDAC, Norway, Risk Weight Floor, Internal Ratings Based Approach, Regulatory Capital, CRR, CRD5, Basel, Small Banks, NSFR, Proportionality, FI
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