EBA issues Opinion on measures to address macroprudential risk

The European Banking Authority (EBA) published today an Opinion following the notification by the Finnish Financial Supervisory Authority (FIN-FSA) of its intention to modify capital requirements in order to address an increase in macroprudential risk, based on Article 458 of the Capital Requirements Regulation (CRR).

 

In particular, the FIN-FSA notified the EBA of its intention to introduce a credit institution-specific minimum level of 15% for the average risk weight on residential mortgage loans applicable to credit institutions that have adopted the Internal Ratings Based (IRB) approach.

 

In its Opinion, addressed to the Council, the European Commission and the FIN-FSA, the EBA, in line with the warning issued by the European Systemic Risk Board (ESRB) on the vulnerabilities of the residential real estate sector, acknowledges the macroprudential risks in the Finnish economy related to residential mortgage loans and residential mortgage indebtedness. In addition, the EBA sees some open questions regarding the choice of measure, the calibration of the measure and the impact of the measure, to bring to the attention of the European Commission.