Finansinspektionen has notified the Commission and the European Systemic Risk Board (ESRB) that it intends to introduce weight floor for commercial real estate in accordance with Article 458 of the CRR. This will replace the current Pillar 2 risk weight floors for exposures secured by commercial real estate. The measure is planned to be effective from 30 September 2023.
The commercial real estate sector constitutes large risks for the financial sector. The sector is large, cyclically sensitive, and closely connected to the financial system. In addition, the indebtedness in the sector is high and Swedish banks have large exposures to the sector. Payment problems and insolvencies in commercial real estate firms can entail credit losses for banks and this can affect financial stability. FI therefore assess that there is a need for a macroprudential measure, in the form of risk weight floors according to article 458 in the CRR, to handle these risks.
The introduction of risk weight floors according to article 458 in the CRR entails that the current Pillar 2 risk weight floors for exposures secured by commercial real estate will be removed. Hence, the capital requirement for the banks in nominal terms will remain relatively unchanged as a result of the proposed measure.