Finansinspektionen (FI) considers there to be elevated risks in the banks’ lending for commercial real estate. The banks should hold more capital for these exposures, which is why FI is raising the capital requirements.
FI decided today on additional capital requirements for the banks' exposures in lending to the commercial real estate sector and how these requirements will be calculated. This decision is based on the proposal FI presented in a memorandum on 27 November 2019 that was then submitted for consultation. FI is presenting in a memorandum today the method it will use to calculate the additional capital requirements.
The additional capital requirement corresponds to the difference between a risk weight determined by FI and a bank's actual average risk weight for exposures to the commercial real estate sector. FI has set the risk weight at 35 per cent for corporate exposures collateralised by commercial real estate and 25 per cent for corporate exposures collateralised by commercial residential properties.
The additional capital requirement will be applied in 2020 during FI's assessment of the banks' capital requirements as part of FI's annual supervisory review and evaluation process (SREP).
The increased capital requirements will primarily affect the three major banks. The additional capital requirement is estimated to be SEK 5 billion for each major bank.