Finansinspektionen has passed a decision to reciprocate the Norwegian Ministry of Finance’s decision to implement an average risk weight floor of 20 per cent for retail exposures collateralised by real estate in Norway and of 35 per cent for corporate exposures collateralised by real estate in Norway.
FI's decision applies as of 30 September 2021 for Swedish credit institutions that have branches or other exposures in Norway and are authorised 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 collateralised by real estate and NOK 6.7 billion for corporate exposures collateralised 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 the memorandum "Nya kapitalkrav för svenska banker" will no longer be applied by Finansinspektionen as of 30 September 2021.
Finansinspektion is postponing its decision on reciprocating the Norwegian systemic risk buffer of 4.5 per cent for Norwegian exposures until more information is available about how Directive (EU) 2019/878 of the European Parliament and of the Council (CRD5) will be implemented in Norway. The ESRB's recommendation of reciprocity (ESRB/2021/3) allows for 18 months to implement the Norwegian systemic risk buffer.