FCMC adopts decisions on reciprocation of Estonian and Belgian macro-prudential measures

20.10.2016
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Riga, 19.10.2016

Press Release 

FCMC adopts decisions on reciprocation of Estonian and Belgian macro-prudential measures 

The Board of the Financial and Capital Market Commission (FCMC) has adopted first decisions on reciprocation of macro-prudential measures on a cross-border basis. 

The Board of FCMC has decided to reciprocate the decision by the central bank of Estonia (Eesti Pank) on applying a 1% systemic risk buffer requirement to all the credit institutions authorised in Esto¬nia and to impose an obligation on the Latvian credit institutions starting from 1 April 2017 to comply with the systemic risk buffer requirement to the exposures to the Estonian residents applied in Estonia. The decision is binding to those Latvian credit institutions whose total exposures to Estonia exceed 1 (one) million euro. (Total cross-border exposures of Latvian credit institutions to Estonia by the end-Q1 2016 amounted to 245.1 million euro or 1.5% of total exposure). 

The Board of FCMC has also decided starting from 1 November 2016 to reciprocate the decision by the National Bank of Belgium On Applying Higher Risk Weight to Mortgage Loans. The decision provides that risk weight shall be increased by 5 percentage points for mortgage loans issued to the Belgian residents by the credit institutions that use internal-ratings based approach in the calculation of capital requirement for credit risk. (The credit institutions registered in the Republic of Latvia have no branches in Belgium and their exposures to the Belgian mortgage market are immaterial. Therefore, reciprocation of the decision by the National Bank of Belgium at the moment will not lead to an increase in capital requirements for any credit institution).

The ultimate objective of reciprocation of macro-prudential measures on a cross-border basis is to apply equal prudential requirements to the same exposures irrespective of geographic location of financial service provider, thus ensuring effectiveness and consistency of national macro-prudential policies of Member States. 

Further information:

Agnese Līcīte

Public Relations Specialist 

Communications Division 

Financial and Capital Market Commission 

Phone +371 67774808; 

Agnese.Licite@fktk.lv

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