EBA issues Opinion on a measure to address macroprudential risk following a notification by the De Nederlandsche Bank
The European Banking Authority (EBA) today published an Opinion following the notification by the Dutch Central Bank (De Nederlandsche Bank - DNB) of its intention to extend a measure originally introduced in 2022 for a further two years until 2026. The measure aims to maintain the resilience of institutions against a potential severe downturn in the residential real estate market. This action comes amidst recent sustained real estate price increases. Based on the information provided by the DNB, the EBA does not object to the extension of the measure.
The measure imposes a minimum average risk weight on Dutch housing loan portfolios for credit institutions that have adopted an internal ratings-based (IRB) approach. The minimum average risk weight is based on a risk weight function which relies on the Loan-to-Value (LTV) of each loan. The measure does not apply to exposures which are wholly or partly covered by the Dutch National Mortgage Guarantee scheme (NHG). The period of application of the two-year extension will start from 1 December 2024.
In its Opinion, addressed to the Council, the European Commission, and the DNB, the EBA takes note of the continued elevated level of systemic risk related to the housing market in the Netherlands. The EBA continues to acknowledge the risks from the high household indebtedness in the Netherlands and the large share of banks’ exposures to the residential real estate mortgage market, including high-LTV loans. The EBA invites the DNB to closely monitor any overlaps of the proposed measure with the output floor and to stand ready to review the calibration of the proposed measure.
Legal basis
On 22 July 2024, the European Banking Authority (EBA) received a notification from the European Systemic Risk Board (ESRB) on the intention of De Nederlandsche Bank (the Central Bank of the Netherlands – DNB), to apply Article 458(9) of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms (Capital Requirements Regulation, CRR). In accordance with the second subparagraph of Article 458(4) of the CRR, within one month of receiving notification from the designated or competent authority entrusted with the national application of Article 458 of the CRR, the EBA is required to provide its opinion on the points referred to in Article 458(2) of the CRR to the Council, the European Commission and the Member State concerned.
Documents
Opinion of the EBA on measures in accord. with Art. 458 of Reg. (EU) No 5752013
(257.07 KB - PDF)
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