The European Banking Authority (EBA) today published an Opinion following the notification by the Ministry of Business, Industry, and Financial Affairs of Denmark to apply Article 133 of the Capital Requirements Directive (CRD) to activate a new systemic risk buffer (SyRB). The proposed measure introduces a systemic risk buffer rate of 7% for a subset of exposure categories located in Denmark to increase banks’ ability to absorb unexpected losses from exposures to real estate companies. The intended date of application of the measure is 30 June 2024.
The measure applies to all credit institutions authorised in Denmark and to exposures to non-financial corporations operating in real estate activities and in construction - development of building projects activities. The measure excludes exposures to social housing associations and housing cooperative associations.
The EBA acknowledges the macroprudential risk concerns raised by the Ministry of Business, Industry and Financial Affairs and welcomes the proposed macroprudential measure that considers risks to the debt servicing capacity of real estate companies. The measure also envisages the application of the EBA Guidelines on the appropriate subsets of sectoral exposures in the application of a systemic risk buffer to identify the appropriate subset of exposures.
In its Opinion, addressed to the European Commission, the EBA noted that the identification of exposures based on NACE Rev.2 codes could increase the risk that the identified subsets lead to a systemic risk buffer application with greater granularity and complexity. In addition, the EBA highlighted that the calibration of macroprudential measures should be clearly linked to the systemic risk identified to ensure that macroprudential measures are effective and proportionate to mitigate risks.
Legal basis
On 10 October 2023, the EBA received a notification from the European Systemic Risk Board (ESRB) on the intention of the Ministry of Business, Industry, and Financial Affairs of Denmark to apply Article 133 of Directive 2013/36/EU of the European Parliament and of the Council to activate a new SyRB. The EBA’s authority to deliver an opinion is based on Article 133(12), second subparagraph, of the Directive 2013/36/EU, and Article 131(5a), in conjunction with Article 131(15), both of that Directive. The EBA may within six weeks of receiving the notification provide the Commission with its opinion, in accordance with Article 16a of Regulation (EU) No 1093/2010.
