Featured Product

    DNB Announces Amendment to Treatment of NHG-Backed Mortgage Loans

    November 19, 2019

    DNB issued a statement on an announcement by the Dutch Homeownership Guarantee Fund (Waarborgfonds Eigen Woningen—NHG) that NHG would provisionally compensate mortgage providers for the expected loss in the event of default. The amendment aims to demonstrate that NHG qualifies as eligible credit protection. This is of relevance to banks that use the standardized approach or elementary internal ratings-based approach to calculate their capital requirements for mortgage loans on residential property. The planned entitlement to a provisional payment is designed to meet the conditions set out in the Capital Requirements Regulation (CRR).

    The planned amendment to the terms and conditions of NHG means that banks acting as mortgage lenders and beneficiaries of the guarantee will be entitled to receive a provisional payment under the guarantee if the borrower of an NHG-backed loan should default. The amount of the payment will be based on a robust estimate of the bank's loss. It will also take into account any excess amount and depend on the coverage under the guarantee at the time of the default, according to the applicable terms and conditions. NHG will make the payment at the bank's request within 21 months of the default, provided all terms and conditions are met. Banks will have the option of receiving a provisional payment not only for new mortgage loans taken out under the modified terms and conditions but this will also apply to NHG-backed mortgage loans taken out previously.

    NHG expects that it will have completed the relevant legal documents and the associated processes in the first quarter of 2020, after which the planned amendments will take effect. Until that time, DNB will use its discretionary power referred to in Article 215(2)(b) of the CRR to qualify NHG as eligible credit protection under the standardized or elementary internal ratings-based approach. It will do so because of the NHG's rapid payment of NHG-backed losses, the rapid handling of loss claims, the high payout ratio, and the objection procedure for rejected loss claims. This applies to banks that are under the direct supervision of DNB.

     

    Related Link: Press Release

    Keywords: Europe, Netherlands, Banking, Internal Ratings Based, Standardized Approach, Expected Loss, CRR, NHG-Backed Loans, Capital Requirements, NHG, Credit Risk, Basel III, DNB

    Featured Experts
    Related Articles
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699