European Commission’s decision regarding the risk weight floor for Swedish mortgages

The European Commission has decided not to propose to the European Council a rejection of Finansinspektionen’s proposal to change the method for the application of the current risk weight floor for Swedish mortgages. This means that the measure may be implemented in Sweden.

Finansinspektionen published a consultation memorandum on 28 March 2018 entitled Changed method for the application of the risk weight floor for Swedish mortgages. The memorandum proposes an average risk weight floor of 25 per cent for Swedish mortgages within the framework of Article 458 of the CRR for credit institutions that have permission to use the IRB approach and have an exposure to Swedish mortgages.

Finansinspektionen notified the European Parliament, the European Council, the European Commission, the European Systemic Risk Board (ESRB) and the European Banking Authority (EBA) on 24 May 2018 about the proposed measure (EU Notification). The ESRB and the EBA then submitted their Opinions to the Council, the Commission and Finansinspektionen in June. Both authorities expressed their support for Finansinspektionen's assessment of the risks associated with Swedish mortgages and did not object to Finansinspektionen's proposed measure.

The European Commission has now decided not to propose to the European Council a rejection of Finansinspektionen's proposal to change the method for the application of the current risk weight floor for Swedish mortgages. This means that the measure may be implemented in Sweden. Finansinspektionen will make its final decision on the matter in the third quarter.

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