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Supervision release 19 December 2014 – 88/2014

Changes in regulations and guidelines 25/2013 on capital requirements calculation and large exposures

Changes have been made in the Financial Supervisory Authority's (FIN-FSA) regulations and guidelines 25/2013 on capital requirements calculation and large exposures and they will enter into force on 31 December 2014.

Initially the regulations and guidelines 25/2013 entered into force at the same time as the start-up of the application of the EU capital requirements regulation (CRR) on 1 January 2014. Because the new Credit Institutions Act and related Ministry of Finances Decrees had not yet been issued, the references to them in the regulations and guidelines had to be left unspecified. Necessary references to the legislation have now been included in the regulations and guidelines.

Provisions on disclosure requirements pertaining to capital adequacy information are included in Part Eight of the CRR and thus there is no chapter on such information in the valid regulations and guidelines 25/2013. However, after the entry into force of the regulations and guidelines, the European Commission has issued the Commission Implementing Regulation (EU) No 650/2014 laying down details on the information to be disclosed by competent authorities. The regulation contains a provision on information to be provided by the competent authority as regards the criteria it applies to assessing the significance of a subsidiary. For this reason, a new chapter 13 on disclosure of capital adequacy information has been added to the regulations and guidelines. This chapter now includes the definition of significant subsidiaries of credit institutions and investment firms, which earlier was included in the Credit Institutions Act. 
 
On 7 July 2014, the European Banking Authority EBA has in turn published guidelines on significant credit risk transfer for securitisation transactions. The guidelines are partly addressed to competent authorities and partly to originator institutions engaging in securitisation transactions. In Finland, the guidelines are implemented by adding a new chapter 9 on capital requirement for securitisation to the regulations and guidelines 25/2013. The new chapter includes a recommendation of compliance with the EBA guidelines.

In addition, after the entry into force of the regulations and guidelines, FIN-FSA has received questions on the calculation of own funds. As a result, supplementing guidelines have been added to chapter 4 on own funds and their minimum amount. A few technical clarifications have finally been added to chapter 5 on capital requirements for credit risk under the standardised approach.

For further information, please contact 

Taina Erovaara-Williams, Senior Risk Expert, tel. +358 10 831 5422 or taina.erovaara-williams(at)fiva.fi.

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