Submission #1

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Raiffeisen Bank International AG

Question 3 (on several templates, see F 18.00) The ESRB recommendation defines CRE as follows: ‘Commercial real estate’ (CRE) means any income-producing real estate, either existing or under development, and excludes (a) social housing; (b) property owned by end-users; (c) buy-to-let housing. If a property has a mixed CRE and RRE use, it should be considered as different properties (based for example on the surface areas dedicated to each use) whenever it is feasible to make such breakdown; otherwise, the property ca be classified according to its dominant use. ‘Commercial reals estate (CRE) loan’ means a loan aimed at acquiring a CRE property (or set of CRE properties) or secured by a CRE property (or set of CRE properties). ‘Income-producing real estate’ means all immovable properties with income generated by their rents or profits from their sale. Is this definition clear? To which extent is compatible with, for example, your internal classification? Which challenges with regard to the practical application of this definition do you envisage?

Although this definition is clear, we would appreciate very much a harmonisation across all supervisory definitions regarding real estate (e.g. Basel IV, FINREP, Austrian VERA-V). Therefore, we are seeing challenges regarding the practical application of the definition insofar as there are diverging definitions of real estate exposures applicable in the current supervisory framework. We would recommend to harmonise these as follows: the BCBS 424 para. 69 in connection with para. 63 definition should be applied in all supervisory and statistical reporting in addition to the calculation of RWAs for credit risk.

Question 4 (on several templates, see F 18.00) The ESRB recommendation defines the current loan-to-value ratio as follows: ‘Current loan-to-value ratio’ (LTV-C) means the sum of all loans or loan tranches secured by the borrower on a property at the reporting date relative to the current value of the property; ‘Current value of the property’ means the value of the property as assessed by an independent external or internal appraiser; if such assessment is not available, the current value of the property can be estimated using a real estate value index sufficiently granular with respect to geographical location and type of property; if such real estate value index is also not available, a real estate price index sufficiently granular with respect to geographical location and type of property can be used after application of a suitably chosen mark-down to account for the depreciation of the property; Is this definition clear? Which challenges with regard to the practical application of this definition do you envisage?

Although, this definition is clear we see a need for harmonisation similar to Question 3. The current BCBS 424 para. 62 f. also defines a LTV ratio. Thereby, the value of the property must be appraised independently using prudently conservative valuation criteria". Additionally, also the numerator is defined differently (outstanding loan amount and any undrawn committed amount of mortgage loan). Again, we see a need for harmonisation of the prudential legislation."

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Name of organisation Raiffeisen Bank International AG