The EBA issues Opinion on a measure to address macroprudential risk following a notification by the Norwegian Ministry of Finance

The European Banking Authority (EBA) today published an Opinion following a notification by the Norwegian Ministry of Finance of its intention to change the calibration of a measure originally introduced on 31 December 2020 and already extended until 30 June 2025. The measure aims to ensure that capital requirements of Norwegian institutions using internal ratings-based (IRB) approaches are appropriate for the systemic risks stemming from their residential real estate exposures. Based on the information provided, the EBA does not object to the measure.

The measure is an exposure-weighted average risk weight floor applying to retail exposures secured by immovable property located in Norway. The institutions in scope of the measure are all institutions established in Norway that use the Internal Ratings Based (IRB) approach for the calculation of capital requirements for the relevant exposures. The notified period of application is between 1 July 2025 until 31 December 2026.

In this Opinion, addressed to the Standing Committee of the EFTA States, the EFTA Surveillance Authority and the Norwegian Ministry of Finance, the EBA takes note of the financial stability risks stemming from high household debt and the build-up of financial imbalances in Norway. Against this background, the EBA invites the Ministry of Finance to closely monitor any overlaps of the proposed measure with microprudential requirements and other macroprudential measures already in force. In particular, the EBA points to unintended overlaps as the output floor requirements are phased-in and invites the Ministry to monitor closely and review the need for the proposed measure.

Legal basis and background

On 11 April 2025, the EBA received a notification from the Norwegian Ministry of Finance of its intention to apply Articles 458(2) and 458(9) of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms (Capital Requirements Regulation, CRR) as incorporated into Annex IX of the Agreement on the European Economic Area (EEA) by the EEA Joint Committee Decision No 79/2019. In accordance with the second subparagraph of Article 458(4) of the CRR as incorporated into Annex IX of the Agreement on the EEA, within one month of receiving the notification, the EBA shall provide its opinion to the Standing Committee of the EFTA States, the EFTA Surveillance Authority and the EFTA State concerned.