EBA speaks out and highlights the measures to address macroprudential risk
The European Banking Authority (EBA) published February 10th an opinion as a result of the intention of the Central Bank of the Netherlands (De Nederlandsche Bank – DNB) to modify the capital requirements in order to address an increase in macroprudential risk.
The measure should be imposed to banks using the IRB approach. In this regard, a minimum average risk weight shall be applied to exposures to natural persons, secured by mortgages on residential property located in the Netherlands. The measure should enhance the resilience of Dutch banks to a potential severe crisis in the housing market.
Taking into account the evidence that DNB has submitted, the EBA does not object to the adoption of the proposed measure, which is based on Article 458 (2) of the Capital Requirements Regulation (CRR).
This article provides further insight on how this new measure aims at strengthening the resilience of the Dutch banking sector to any potential severe downturn in the residential real estate market.