FI reciprocates the Norwegian risk weight floors

Finansinspektionen (FI) has passed a decision to reciprocate the Norwegian Ministry of Finance’s decision of risk weight floors of 25 per cent for retail exposures collateralised by real estate in Norway and of 35 per cent for corporate exposures collateralised by real estate in Norway.

Through national measures pursuant to Article 458 of the Capital Requirements Regulation (CRR), Norway has since 2020 introduced risk weight floors for real estate exposures in Norway. The Norwegian Ministry of Finance has decided to extend the risk weight floor of 35 per cent for corporate exposures collateralised by real estate and to adjust the level of the risk weight floor applicable to residential real estate from 20 per cent to 25 per cent. The risk weight floors applies for institutions that are authorized to use an internal ratings-based approach for the calculation of their capital requirements for credit risks.

FI will apply the threshold of NOK 37.8 billion for retail exposures collateralised by real estate and NOK 9.3 billion for corporate exposures collateralised by real estate, as stated by the Norwegian Ministry of Finance.

FI:s decision means that Swedish credit institutions with permission to use the internal ratings-based approach, and which have exposures in Norway that exceed the specified thresholds, are covered by the Norwegian risk weight floors.