The proposed implementation in the EU of the output floor set out in the finalisation of the Basel Committee’s post crisis reforms from December 2017 is the most important issue to address. The Commission’s proposal applies transitional provisions to mitigate the disproportional effect of the output floor in different regions in Europe, including the Nordic countries, which is due to elements of the international Basel standards being poorly aligned to the European business model for financing corporates and real estate. A permanent more risk sensitive implementation of the output floor is essential and it should involve adjustments for unrated corporates and real estate exposures, including exposures secured by commercial real estate, that acknowledge European specificities. There are other elements in the Commission’s proposal where we see a need for adjustments. Among these, Finance Denmark emphasizes a need for adjustments to the proposal to ensure an appropriate treatment of small and midsize Danish Banks’ equity exposures to jointly owned ancillary services providers.
Position paper on the proposal from the European Commission on a review of the CRR
Finance Denmark is a business association for banks, mortgage institutions, asset management, securities trading and investment funds in Denmark. Our members are mortgage institutions, banks, savings banks, cooperative savings banks, Danish branches of foreign banks, asset managers, Danish securities dealers and investment funds.