ISSN 1977-091X |
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Official Journal of the European Union |
C 31 |
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English edition |
Information and Notices |
Volume 60 |
Notice No |
Contents |
page |
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I Resolutions, recommendations and opinions |
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RECOMMENDATIONS |
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European Systemic Risk Board |
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2017/C 31/01 ESRB/2016/14 |
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2017/C 31/02 ESRB/2016/05 |
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2017/C 31/03 ESRB/2016/06 |
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2017/C 31/04 ESRB/2016/07 |
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2017/C 31/05 ESRB/2016/08 |
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2017/C 31/06 ESRB/2016/09 |
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2017/C 31/07 ESRB/2016/10 |
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2017/C 31/08 ESRB/2016/11 |
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2017/C 31/09 ESRB/2016/12 |
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II Information |
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INFORMATION FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
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European Commission |
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2017/C 31/10 |
Non-opposition to a notified concentration (Case M.8327 — Fairfax/Sagard Holdings/PSG) ( 1 ) |
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IV Notices |
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NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
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European Commission |
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2017/C 31/11 |
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2017/C 31/12 |
Commission Decision of 24 January 2017 establishing the Commission Expert Group Platform on Animal Welfare ( 1 ) |
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(1) Text with EEA relevance. |
EN |
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I Resolutions, recommendations and opinions
RECOMMENDATIONS
European Systemic Risk Board
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/1 |
RECOMMENDATION OF THE EUROPEAN SYSTEMIC RISK BOARD
of 31 October 2016
on closing real estate data gaps
(ESRB/2016/14)
(2017/C 31/01)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Article 3(2)(b), (d) and (f) and Articles 16 to 18 thereof,
Having regard to Decision ESRB/2011/1 of the European Systemic Risk Board of 20 January 2011 adopting the Rules of Procedure of the European Systemic Risk Board (2), and in particular Articles 18 to 20 thereof,
Whereas:
(1) |
The real estate sector plays an important role in the economy and its developments can have a material influence on the financial system. Past financial crises demonstrated that unsustainable developments in real estate markets may have severe repercussions on the stability of the financial system and of the economy as a whole. Adverse real estate market developments in some Member States, both in residential real estate (RRE) and commercial real estate (CRE), resulted in large losses in the past and negatively impacted the real economy. This reflects the close interplay between the real estate sector, funding providers and other economic sectors, and the strong feedback loops between the financial system and the real economy, reinforcing any negative developments. |
(2) |
These linkages are important because they indicate that risks originating in the real estate sector can have a systemic impact that is procyclical in nature. Financial system vulnerabilities tend to accumulate during the upswing phase of the real estate cycle. The perceived lower risks and easier access to funding may contribute to rapid credit and investment expansion, along with an increased demand for real estate, putting upward pressure on property prices. Since the resulting higher collateral values further favour the demand for and supply of credit, these self-reinforcing dynamics can result in speculative bubbles. Conversely, during the downturn phase of the real estate cycle, tighter credit conditions, higher risk aversion and downward pressure on real estate prices may adversely affect the resilience of borrowers and lenders, thereby weakening economic conditions. |
(3) |
Establishing a more harmonised framework for monitoring developments in the RRE and CRE markets, the segments of the real estate sector most relevant for financial stability purposes, is therefore crucial to ensure early identification of vulnerabilities that could lead to future financial crises. Policymakers need to have a certain set of relevant information available, including a reliable set of key indicators, to help identify the build-up of systemic risks and assess the potential need for macroprudential intervention. In addition, these indicators can play an important role in determining whether and when to tighten or release the harmonised macroprudential instruments targeting lenders that are available under Union law. Furthermore, the indicators can also be used to guide national authorities in the use of national macroprudential instruments that target borrowers. |
(4) |
The lack of commonly agreed working definitions across Member States on the RRE and CRE sectors, along with operational constraints on data availability for a number of relevant indicators, hampers the reliability of financial stability analyses, making it difficult to accurately assess and compare risks across national markets. On the RRE side, earlier work by the European Systemic Risk Board (ESRB) (3) has highlighted that comparable high-quality data on some key metrics needed for financial stability surveillance and policy-making are still not available. In addition, the assessment of the ability of these indicators to provide early warnings against the build-up of systemic risks has been hampered by the absence of reliable and harmonised time series. On the CRE side, similar ESRB work (4) concluded that the absence of a harmonised working definition of commercial property and the lack of a granular and consistent data framework to capture broader market developments made the analyses of systemic risks problematic. |
(5) |
Measures have been designed and implemented across Member States to dampen the procyclical effects of real estate markets and to strengthen the resilience of credit institutions against negative spillovers arising from real estate market dynamics. In addition, the prudential rules for the Union’s banking sector, as laid down in Regulation (EU) No 575/2013 of the European Parliament and of the Council (5) and Directive 2013/36/EU of the European Parliament and of the Council (6), introduced a set of instruments, such as sectoral capital requirements, aimed at mitigating risks emerging in specific sectors, including real estate. The Union’s prudential framework focusses mainly on capital-based measures targeting the capital structure of credit institutions. Instruments targeting borrowers, such as limits on the loan-to-value ratio, the loan-to-income ratio, the debt-to-income ratio, the interest coverage ratio and the debt-service-to-income ratio or the debt service coverage ratio, fall outside the scope of Regulation (EU) No 575/2013 and Directive 2013/36/EU and their implementation is governed by national law. Some of these instruments have already been activated by several Member States, although the definitions of the instruments and indicators vary. |
(6) |
In carrying out its task, the ESRB should contribute to ensuring financial stability and mitigating the negative impacts on the internal market and the real economy. For these purposes, the availability of harmonised working definitions and a core set of comparable and timely available real estate indicators are of key importance. A better understanding of the structural and cyclical characteristics of RRE and CRE markets in the Union will be helpful in allowing national macroprudential authorities to better track the dynamics of the real estate sector, to identify the threats it may pose to financial stability and to guide appropriate action. |
(7) |
Existing gaps in the availability and comparability of data on RRE and CRE markets in the Union relevant for macroprudential purposes should therefore be addressed. Accordingly, target working definitions of RRE and CRE should be provided for this purpose. In addition, a common set of indicators that national macroprudential authorities are recommended to monitor in order to assess risks resulting from the RRE and CRE sectors should be identified, along with target definitions of these indicators. The guidance should further specify the dimensions and degree of granularity for each indicator, the scope of the envisaged information and the measurement of the indicators. |
(8) |
The adoption of harmonised definitions and methods for measuring indicators used for monitoring RRE and CRE markets does not prevent national macroprudential authorities from relying, for their internal risk and policy assessment, on real estate indicators based on their own definitions and metrics, which may be better suited to accommodate national requirements. |
(9) |
Considering the strong procyclical nature of developments in CRE markets, risk monitoring in these markets should be performed more frequently than the monitoring of the RRE markets. Therefore, for the physical market as well as investment and credit flows and corresponding lending standards, monitoring should take place at least quarterly. Monitoring of the stocks of investments and lending and the corresponding lending standards in the CRE sector, as well as the development of lending standards in the RRE sector, should take place at least once a year. |
(10) |
As CRE markets are heterogeneous, national macroprudential authorities should be encouraged to break down the common set of indicators according to relevant dimensions, such as the property type, the location of the property, and the type and nationality of the market participants. Moreover, the ESRB encourages national macroprudential authorities to consider information on the distribution of key indicators such as the loan-to-value at origination ratio, the current loan-to-value ratio, the interest coverage ratio and the debt service coverage ratio according to relevant risk buckets. Since, at this juncture, information on such distributions is not available at Union level, no specific guidance can be given as regards to relevant risk buckets for these CRE indicators. In the absence of more specific information, a monitoring on the basis of distribution characteristics of the indicators (e.g. quantiles) can be an alternative, with a need to focus on tail risks (i.e. the upper or lower quantiles depending on the indicator at hand). |
(11) |
CRE markets are typically characterised by a wide range of market participants, often foreign-based and sometimes not subject to any microprudential or macroprudential supervision. The European Supervisory Authorities (ESAs) should therefore be encouraged to publish, on an annual basis, relevant aggregated data at country level on the activity in CRE markets of the entities under the scope of their supervision, drawing on data collected through existing regulatory reporting templates. Such public disclosure will enhance the knowledge of national macroprudential authorities on the activity of entities from other Member States on their domestic CRE market. |
(12) |
In addition to using quantitative indicators, the ESRB encourages national macroprudential authorities to monitor developments in real estate markets through regular contacts with relevant market participants, in particular for the CRE sector. |
(13) |
This Recommendation has been prepared taking into account other ongoing international and European initiatives in the area of data harmonisation and collection, the most relevant in the context of closing real estate data gaps being Regulation (EU) 2016/867 of the European Central Bank (7), which introduced the AnaCredit project. However, AnaCredit cannot be relied on alone for meeting the information needs identified in this Recommendation due to some of its features. First, the definitions of RRE and CRE provided in the Recommendation are more detailed and better suited for financial stability purposes than those laid down in the Regulation (EU) 2016/867, which only refers to the definitions in the Regulation (EU) No 575/2013. Second, information on some key indicators and market segments identified as important for financial stability in this Recommendation (such as the buy-to-let segment) is not provided for in Regulation (EU) 2016/867. Third, only euro area Member States are within the scope of AnaCredit. Non-euro area Member States have the option to participate on a voluntary basis, but at this stage it is still unclear which Member States will opt for this. Fourth, AnaCredit is currently restricted to legal persons and other institutional units, including non-financial corporations. Information on credit to natural persons is not yet within its scope and the timing of such extension is not yet defined. Fifth, AnaCredit collects loans held or serviced by credit institutions. This approach implies that loans held by other market participants are registered in AnaCredit only when a credit institution is servicing the loan. The importance of other market participants in real estate financing, in particular CRE property, requires a large collection of loans granted by these institutions. As set out in Recitals (10) and (12) of the Regulation ECB/2016/13, when preparing future stages of AnaCredit, the scope of loans in this market segment will be assessed as part of the merits and costs procedure, prior to possible extensions of the reporting population and of the reporting requirements to better cover RRE and CRE loans. Sixth, in application of the proportionality principle small banks may be excluded from the scope of AnaCredit (8) although a macroprudential authority might consider that also their activity in the real estate sector needs to be monitored for reasons of financial stability. |
(14) |
In order to achieve a coherent implementation of the real estate indicators and to build upon existing decisions, structures, projects and methodological work, it is advised to liaise with the AnaCredit project for the implementation of this Recommendation. |
(15) |
The purpose of the Recommendation is that national macroprudential authorities implement a framework for monitoring developments in the real estate sector relevant for financial stability and based on the recommended commonly agreed target definitions and indicators. The ESRB is also of the view that it would be beneficial for financial stability and macroprudential policymaking to regularly collect and distribute at Union level comparable country data on these indicators. This would not only allow a more accurate assessment of real estate-related risks across Member States, but also a comparison of the use of macroprudential policy instruments activated by the Member States to address real estate-related vulnerabilities. Under Article 2 of Council Regulation (EU) No 1096/2010 of 17 November 2010 conferring specific tasks upon the European Central Bank (ECB) concerning the functioning of the ESRB, the ECB is required to provide analytical, statistical, logistical and administrative support to the ESRB. The ECB is therefore well-placed to coordinate such a data collection and distribution at Union level. Work on this should be initiated immediately after the adoption of the Recommendation, in consultation with Eurostat and the national statistical agencies as appropriate. As macroprudential authorities start implementing the Recommendation and the actual data collection at Union level proceeds, further technical guidance and work on the target definitions and indicators will be needed to accommodate for the specificities of markets or market segments and to ensure the statistical quality of the data; however, any such more detailed implementation guidance should not change the basic features and purpose of the target definitions and indicators as laid down in this Recommendation. |
(16) |
In the implementation of this Recommendation and the further technical work mentioned in Recital (15), due regard should be paid to the principle of proportionality. When proceeding with the implementation of the relevant indicators and methods for their calculation, the size and development of the national RRE and CRE markets should be taken into account. Any assessment as regards the implementation of the Recommendation should consider the progress and constraints faced in the data collection at Union level mentioned in Recital (15). In particular, the final reports due by end 2020 for Recommendations A to D may not necessarily include all key indicators if justified by such constraints. |
(17) |
This Recommendation is without prejudice to the monetary policy mandates of the central banks in the Union. |
(18) |
The observations of the relevant private sector stakeholders have been taken into account in preparing this Recommendation. |
(19) |
ESRB recommendations are published after the General Board has informed the Council of its intention to do so and provided the Council with an opportunity to react, |
HAS ADOPTED THIS RECOMMENDATION:
SECTION 1
RECOMMENDATIONS
Recommendation A – Monitoring risks arising from the residential real estate sector
1. |
National macroprudential authorities are recommended to implement a risk monitoring framework for their domestic RRE sector, including information on current lending standards for domestic RRE loans. For this purpose, the following set of lending standards indicators is recommended for effective monitoring of risks arising from the RRE market:
The information on these indicators should relate to domestic credit providers on a solo basis and should be sufficiently representative of the domestic RRE loan market. |
2. |
Where buy-to-let housing represents a significant source of risks stemming from the domestic real estate sector, possibly but not only because it constitutes a significant share of the stock or flows of total RRE lending, national macroprudential authorities are recommended to implement a risk monitoring framework based on a number of additional indicators for this market segment. Where no or limited quantitative information is available to assess the significance of buy-to-let housing, this assessment may initially have to be made on the basis of more qualitative information. The additional indicators for this market segment should include:
|
3. |
For the calculation of the indicators listed in paragraphs 1 and 2, national macroprudential authorities are recommended to follow the guidance specified in Annex IV to this Recommendation. |
4. |
On the basis of the indicators laid down in paragraphs 1 and 2, national macroprudential authorities are recommended to monitor developments in the domestic RRE sector at least annually. |
Recommendation B – Relevant information in relation to the residential real estate sector
1. |
National macroprudential authorities are recommended to monitor the univariate distribution and the selected joint distributions of the relevant indicators as specified in Template A of Annex II to this Recommendation. This template provides guidance on the granularity of the information relevant for the monitoring of risks arising from the domestic RRE sector. |
2. |
National macroprudential authorities are recommended to monitor risks in relation to the different indicators on the basis of the following information as specified in Template A of Annex II to this Recommendation.
|
3. |
Where buy-to-let housing represents a significant source of risks stemming from the domestic RRE sector, possibly but not only because it constitutes a significant share of the stock or flows of total RRE lending, national macroprudential authorities are recommended to monitor risks in relation to the relevant indicators separately for buy-to-let housing and owner-occupied properties. In this case, national macroprudential authorities should consider also the breakdowns specified in Template B of Annex II to this Recommendation. |
Recommendation C – Monitoring risks arising from the commercial real estate sector
1. |
National macroprudential authorities are recommended to implement a risk monitoring framework for their domestic CRE sector. For this purpose, the following set of indicators is recommended for effective monitoring of risks arising from the CRE market: Indicators on the physical CRE market:
Indicators on the financial system’s CRE credit exposures:
Indicators on CRE lending standards:
The information on these indicators should relate to credit providers on a solo basis and should be sufficiently representative of the domestic CRE market. |
2. |
Where investments are deemed to represent a significant share of CRE financing, national macroprudential authorities are recommended to include in the risks monitoring framework for their domestic CRE sector also the following set of additional indicators on CRE investment exposures:
The information on these indicators should relate to investors on a solo basis and should be sufficiently representative of the domestic CRE market. |
3. |
For the calculation of the indicators listed in paragraphs 1 and 2, national macroprudential authorities are recommended to follow the guidance specified in Annex V and, where appropriate for CRE, in Annex IV to this Recommendation. |
4. |
On the basis of the indicators laid down in paragraphs 1 and 2, national macroprudential authorities are recommended to monitor developments in the domestic CRE sector at least quarterly for the physical market, lending and investment flows (including flows of non-performing loans, loan loss provisions and valuation adjustments on investments) and the corresponding lending standards. Such monitoring should take place at least annually for the stock of loans and investments (including stocks of non-performing loans, loan loss provisions and valuation adjustments on investments) and the corresponding lending standards. |
Recommendation D – Relevant information in relation to the commercial real estate sector
1. |
National macroprudential authorities are recommended to monitor the relevant indicators as specified in Templates A, B and C of Annex III to this Recommendation. These templates provide guidance on the granularity of the information necessary to monitor risks arising from the domestic CRE sector. |
2. |
National macroprudential authorities are recommended to monitor risks in relation to the different indicators on the basis of the following information as specified in Templates A, B and C of Annex III to this Recommendation:
|
3. |
Where investments are deemed to represent a significant share of CRE financing, national macroprudential authorities are recommended to include in the risks monitoring framework for their domestic CRE sector also the following set of additional information on CRE investment exposures as specified in Template B of Annex III to this Recommendation:
|
Recommendation E – Publication by the European Supervisory Authorities of exposure data to national commercial real estate markets
1. |
The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) are recommended to publish, at least annually, aggregated data on the exposures of the entities subject to their respective supervision to each national CRE market in the Union in accordance with the guidance provided in Annex V.9 to this Recommendation. These aggregated data should be based on information available to the ESAs under existing reporting requirements. |
SECTION 2
IMPLEMENTATION
1. Definitions
1. |
For the purposes of this Recommendation, and taking into account the further technical specifications in Annex IV and Annex V to this Recommendation, the following definitions apply:
|
2. Criteria for implementation
1. |
The following criteria apply to the implementation of the Recommendation:
|
2. |
Addressees are requested to report to the ESRB and the Council on the actions undertaken in response to this Recommendation, or adequately justify any inaction. The reports should at minimum contain:
|
3. Timeline for the follow-up
Addressees are requested to report to the ESRB and the Council on the actions taken in response to this Recommendation, or adequately justify any inaction, in compliance with the following timelines:
1. |
Recommendation A
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2. |
Recommendation B
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3. |
Recommendation C
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4. |
Recommendation D
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5. |
Recommendation E
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4. Monitoring and assessment
1. |
The ESRB Secretariat will:
|
2. |
The General Board will assess the actions and justifications reported by the addressees and, where appropriate, may decide that this Recommendation has not been followed and that an addressee has failed to provide adequate justification for its inaction. |
Done at Frankfurt am Main, 31 October 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat,
on behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
(3) ESRB, Report on residential real estate and financial stability in the EU, December 2015.
(4) ESRB, Report on commercial real estate and financial stability in the EU, December 2015.
(5) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
(6) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).
(7) Regulation (EU) 2016/867 of the European Central Bank of 18 May 2016 on the collection of granular credit and credit risk data (ECB/2016/13) (OJ L 144, 1.6.2016, p. 44).
(8) National central banks may grant derogations to small credit institutions provided that the combined contribution of all credit institutions that are granted a derogation to the total outstanding amount of loans in the reporting Member State does not exceed 2 %.
(9) Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro-prudential mandate of national authorities (OJ C 41, 14.2.2012, p. 1).
ANNEX I
COMPLIANCE CRITERIA FOR THE RECOMMENDATIONS
1. Recommendation A
National macroprudential authorities will be deemed to comply with Recommendations A(1) and A(2), where they:
a) |
assess whether the relevant indicators on lending standards for RRE loans are considered or implemented in the risk monitoring framework of the RRE sector in their jurisdiction; |
b) |
assess progress on the use of the indicators specified in Recommendation A(1) for such monitoring; |
c) |
assess the extent to which the information, already available or expected to be available in the future, on the relevant indicators is sufficiently representative of current lending standards in their RRE loan market; |
d) |
assess whether buy-to-let housing represents a significant source of risks stemming from the domestic real estate sector or constitutes a significant share of the stock or flows of total RRE lending; |
e) |
in cases where buy-to let housing is considered a significant source of risks stemming from the domestic real estate sector or constitutes a significant share of the stock or flows of total RRE lending, assess progress on the use of the indicators for risk monitoring specified in Recommendation A(2). |
National macroprudential authorities will be deemed to comply with Recommendations A(3) and A(4) where they:
a) |
ensure the adoption of the methods specified in Annex IV for the calculation of the indicators listed in Recommendations A(1) and A(2); |
b) |
in cases where another method is used in addition to that specified in Annex IV for the calculation of the relevant indicators, report on the method’s technical features and its effectiveness in monitoring risks arising from the RRE sector; |
c) |
ensure that the relevant indicators listed in Recommendations A(1) and A(2) are used to monitor risks in the RRE sector at least annually. |
2. Recommendation B
National macroprudential authorities will be deemed to comply with Recommendations B(1) and B(2), where they:
a) |
assess progress on the monitoring of the univariate distribution and the selected joint distributions of the relevant indicators as specified in Template A of Annex II; |
b) |
assess progress on the use of the information specified in Recommendation B(2) and in Template A of Annex II as a guidance to monitor the relevant risks. |
In cases where buy-to-let housing is considered a significant source of risks stemming from the domestic real estate sector or constitutes a significant share of the stock or flows of total RRE lending, national macroprudential authorities will be deemed to comply with Recommendation B(3) where they:
a) |
assess progress on the separate monitoring of the relevant indicators for buy-to-let housing and owner occupied properties; |
b) |
assess progress on the monitoring of the relevant data broken down by the dimensions as specified in Templates A and B of Annex II. |
3. Recommendation C
National macroprudential authorities will be deemed to comply with Recommendations C(1) and C(2) where they:
a) |
assess whether the relevant indicators for domestic CRE exposures are considered or implemented in the risk monitoring framework for the CRE sector in their jurisdiction; |
b) |
ensure inclusion in the risk monitoring framework of the indicators on the physical market, the indicators on financial system credit exposures and the indicators on lending standards; when collecting these types of indicators on the physical market is not within the powers of a macroprudential authority, such impossibility will be considered sufficient to explain the inaction of the relevant authority in the phase of the assessment; |
c) |
assess whether investments represent a significant source of financing for the domestic CRE sector; |
d) |
in cases where investments are considered a significant source of financing for the domestic CRE sector, assess progress on the use of the additional indicators for risk monitoring specified in Recommendation C(2); |
e) |
assess progress on the use of the indicators specified, at a minimum, in Recommendation C(1) and, where applicable, in Recommendation C(2); |
f) |
assess whether the information on these indicators (already available or expected to be available) is sufficiently representative of the domestic CRE market. |
National macroprudential authorities will be deemed to comply with Recommendations C(3) and C(4) where they:
a) |
ensure the adoption of the methods for the calculation of the indicators listed in Recommendation C(1) and Recommendation C(2) as specified in Annex V and, where appropriate for CRE, in Annex IV; |
b) |
in cases where another method is used in addition to that specified in Annex IV and Annex V for the calculation of the relevant indicators, report on the method’s technical features and its effectiveness in monitoring risks arising from the CRE sector; |
c) |
ensure that the indicators listed in Recommendation C(1) are used to monitor developments in the CRE sector at least quarterly for physical market indicators, lending flows (including flows of non-performing loans and loan loss provisions) and the corresponding lending standards, and at least annually for stocks of loans (including stocks of non-performing loans and loan loss provisions) and the corresponding lending standards; |
d) |
in cases where investments are considered a significant source of financing for the domestic CRE sector, ensure that the indicators listed in Recommendation C(2) are used to monitor developments in the CRE sector at least quarterly for investment flows (including valuation adjustments on investments) and at least annually for stocks of investments (including valuation adjustments on investments). |
4. Recommendation D
National macroprudential authorities will be deemed to comply with Recommendation D where they:
a) |
assess progress in monitoring the relevant indicators as specified in Templates A, B and C of Annex III; |
b) |
assess progress on the use of the relevant information as specified in Recommendation D(2) and indicated in Templates A, B and C of Annex III as a guidance to monitor the relevant risks; |
c) |
in cases where investments are considered a significant source of financing for the domestic CRE sector, assess progress on the use of the relevant information as specified in Recommendation D(3) and indicated in Template B of Annex III as a guidance to monitor relevant risks; |
d) |
in cases where additional indicators are used to monitor developments in the CRE sector, report on the additional information used for monitoring risks. |
5. Recommendation E
The ESAs will be deemed to comply with Recommendation E where they:
a) |
define a template for the publication of data on the exposures of the entities under the scope of their supervision to each national CRE market in the Union; |
b) |
publish at least annually aggregated data collected under existing reporting requirements on the exposures of the entities under the scope of their supervision to each national CRE market in the Union. |
ANNEX II
INDICATIVE TEMPLATES FOR INDICATORS ON THE RESIDENTIAL REAL ESTATE SECTOR
1. Template A: indicators and related breakdowns for RRE loans
FLOWS= new production of RRE loans within the reporting period, as considered by the lender. National macro-prudential authorities which are able to distinguish between truly new RRE loans and renegotiated loans are provided the option to identify renegotiated loans as a separate breakdown. STOCKS= Data for the stocks of RRE loans at reporting date (e.g. end of year) ncu= amount in national currency #= number of contracts y= year(s) Avg= average of the relevant ratio o/w= of which |
UNIVARIATE DISTRIBUTION
Overview of RRE loan portfolio |
|
FLOWS |
|
|
Loan-service-to-income at origination (LSTI-O) |
|
FLOWS |
Loans disbursed |
|
ncu, # |
|
|
WEIGHTED AVERAGE |
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Avg (in %) |
o/w buy-to-let |
|
ncu, # |
|
|
o/w buy-to-let |
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Avg (in %) |
o/w owner-occupied |
|
ncu, # |
|
|
o/w owner-occupied |
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Avg (in %) |
o/w first-time buyers |
|
ncu, # |
|
|
o/w first-time buyers |
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Avg (in %) |
o/w loans in foreign currency |
|
ncu, # |
|
|
o/w loans in foreign currency |
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Avg (in %) |
o/w fully amortising |
|
ncu, # |
|
|
o/w fully amortising |
|
Avg (in %) |
o/w partially amortising |
|
ncu, # |
|
|
o/w partly amortising |
|
Avg (in %) |
o/w non-amortising (*1) |
|
ncu, # |
|
|
o/w non-amortising (*1) |
|
Avg (in %) |
o/w ≤ 1y initial interest rate fixation period |
|
ncu, # |
|
|
o/w ≤ 1y initial interest rate fixation period |
|
Avg (in %) |
o/w ] 1y; 5y] initial interest rate fixation period |
|
ncu, # |
|
|
o/w ] 1y; 5y] initial interest rate fixation period |
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Avg (in %) |
o/w ] 5y; 10y] initial interest rate fixation period |
|
ncu, # |
|
|
o/w ] 5y; 10y] initial interest rate fixation period |
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Avg (in %) |
o/w > 10y initial interest rate fixation period |
|
ncu, # |
|
|
o/w > 10y initial interest rate fixation period |
|
Avg (in %) |
o/w renegotiated (optional) |
|
ncu, # |
|
|
DISTRIBUTION |
|
|
|
|
|
|
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≤10 % |
|
ncu, # |
|
|
|
|
|
]10 % ; 20 %] |
|
ncu, # |
Loan-to-value at origination (LTV-O) |
|
FLOWS |
|
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]20 % ; 30 %] |
|
ncu, # |
|
|
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]30 % ; 40 %] |
|
ncu, # |
||
WEIGHTED AVERAGE |
|
Avg (in %) |
|
|
]40 % ; 50 %] |
|
ncu, # |
o/w buy-to-let |
|
Avg (in %) |
|
|
]50 % ; 60 %] |
|
ncu, # |
o/w owner-occupied |
|
Avg (in %) |
|
|
> 60 % |
|
ncu, # |
o/w first-time buyers |
|
Avg (in %) |
|
|
Not available |
|
ncu, # |
o/w loans in foreign currency |
|
Avg (in %) |
|
|
|
|
|
o/w fully amortising |
|
Avg (in %) |
|
|
|
|
|
o/w partially amortising |
|
Avg (in %) |
|
|
Debt-service-to-income at origination (DSTI-O) (OPTIONAL) |
|
FLOWS |
o/w non-amortising (*1) |
|
Avg (in %) |
|
|
|
||
DISTRIBUTION |
|
|
|
|
WEIGHTED AVERAGE |
|
Avg (in %) |
≤ 50 % |
|
ncu, # |
|
|
DISTRIBUTION |
|
|
]50 % ; 60 %] |
|
ncu, # |
|
|
≤10 % |
|
ncu, # |
]60 % ; 70 %] |
|
ncu, # |
|
|
]10 % ; 20 %] |
|
ncu, # |
]70 % ; 80 %] |
|
ncu, # |
|
|
]20 % ; 30 %] |
|
ncu, # |
]80 % ; 90 %] |
|
ncu, # |
|
|
]30 % ; 40 %] |
|
ncu, # |
]90 % ; 100 %] |
|
ncu, # |
|
|
]40 % ; 50 %] |
|
ncu, # |
]100 % ; 110 %] |
|
ncu, # |
|
|
]50 % ; 60 %] |
|
ncu, # |
> 110 % |
|
ncu, # |
|
|
> 60 % |
|
ncu, # |
Not available |
|
ncu, # |
|
|
Not available |
|
ncu, # |
Current loan-to-value (LTV-C) |
|
|
STOCKS |
|
Loan-to-income at origination (LTI-O) |
|
FLOWS |
WEIGHTED AVERAGE |
|
|
Avg (in %) |
|
WEIGHTED AVERAGE |
|
Avg |
DISTRIBUTION |
|
|
|
|
DISTRIBUTION |
|
|
≤ 50 % |
|
|
ncu, # |
|
≤3 |
|
ncu, # |
]50 % ; 60 %] |
|
|
ncu, # |
|
]3 ; 3,5 ] |
|
ncu, # |
]60 % ; 70 %] |
|
|
ncu, # |
|
]3,5 ; 4] |
|
ncu, # |
]70 % ; 80 %] |
|
|
ncu, # |
|
]4 ; 4,5 ] |
|
ncu, # |
]80 % ; 90 %] |
|
|
ncu, # |
|
]4,5 ; 5] |
|
ncu, # |
]90 % ; 100 %] |
|
|
ncu, # |
|
]5 ; 5,5 ] |
|
ncu, # |
]100 % ; 110 %] |
|
|
ncu, # |
|
]5,5 ; 6] |
|
ncu, # |
> 110 % |
|
|
ncu, # |
|
> 6 |
|
ncu, # |
Not available |
|
|
ncu, # |
|
Not available |
|
ncu, # |
Maturities at origination |
|
FLOWS |
|
|
Debt-to-income at origination (DTI-O) |
|
FLOWS |
WEIGHTED AVERAGE |
|
Avg (years) |
|
|
WEIGHTED AVERAGE |
|
Avg |
DISTRIBUTION |
|
|
|
|
DISTRIBUTION |
|
|
≤ 5y |
|
ncu, # |
|
|
≤3 |
|
ncu, # |
]5y ; 10y] |
|
ncu, # |
|
|
]3 ; 3,5 ] |
|
ncu, # |
]10y ; 15y] |
|
ncu, # |
|
|
]3,5 ; 4] |
|
ncu, # |
]15y ; 20y] |
|
ncu, # |
|
|
]4 ; 4,5 ] |
|
ncu, # |
]20y ; 25y] |
|
ncu, # |
|
|
]4,5 ; 5] |
|
ncu, # |
]25y ; 30y] |
|
ncu, # |
|
|
]5 ; 5,5 ] |
|
ncu, # |
]30y ; 35y] |
|
ncu, # |
|
|
]5,5 ; 6] |
|
ncu, # |
> 35y |
|
ncu, # |
|
|
]6,5 ; 7] |
|
ncu, # |
Not available |
|
ncu, # |
|
|
> 7 |
|
ncu, # |
|
|
|
|
|
Not available |
|
ncu, # |
JOINT DISTRIBUTION
FLOWS |
|
Loan-service-to-income at origination (LSTI-O) |
|
FLOWS |
|
Loan-service-to-income at origination (LSTI-O) |
||||
|
|
≤30 % |
]30 % ; 50 %] |
>50 % |
|
Initial interest rate fixation period |
|
≤30 % |
]30 % ; 50 %] |
>50 % |
LTV-O ≤ 80 % |
|
|
|
|
|
o/w ≤ 1y |
|
ncu, # |
ncu, # |
ncu, # |
Maturity at origination |
|
|
|
|
|
o/w ] 1y; 5y] |
|
ncu, # |
ncu, # |
ncu, # |
≤ 20y |
|
ncu, # |
ncu, # |
ncu, # |
|
o/w ] 5y; 10y] |
|
ncu, # |
ncu, # |
ncu, # |
]20y ; 25y] |
|
ncu, # |
ncu, # |
ncu, # |
|
o/w > 10y |
|
ncu, # |
ncu, # |
ncu, # |
> 25y |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
LTV-O ]80 %-90 %] |
|
|
|
|
|
FLOWS |
|
Debt-to-income at origination (DTI-O) |
||
Maturity at origination |
|
|
|
|
|
|
||||
≤ 20y |
|
ncu, # |
ncu, # |
ncu, # |
|
Loan-to-value at origination (LTV-O) |
|
≤ 4 |
]4 ; 6] |
> 6 |
]20y ; 25y] |
|
ncu, # |
ncu, # |
ncu, # |
|
LTV-O ≤ 80 % |
|
ncu, # |
ncu, # |
ncu, # |
> 25y |
|
ncu, # |
ncu, # |
ncu, # |
|
LTV-O ]80 % ; 90 %] |
|
ncu, # |
ncu, # |
ncu, # |
LTV-O ]90 %-110 %] |
|
|
|
|
|
LTV-O ]90 % ; 110 %] |
|
ncu, # |
ncu, # |
ncu, # |
Maturity at origination |
|
|
|
|
|
LTV-O >110 % |
|
ncu, # |
ncu, # |
ncu, # |
≤ 20y |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
]20y ; 25y] |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
> 25y |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
LTV-O >110 % |
|
|
|
|
|
|
|
|
|
|
Maturity at origination |
|
|
|
|
|
|
|
|
|
|
≤ 20y |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
]20y ; 25y] |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
> 25y |
|
ncu, # |
ncu, # |
ncu, # |
|
|
|
|
|
|
2. Template B: indicators and related breakdowns for buy-to-let and owner occupied RRE loans
FLOWS= new production of RRE loans within the reporting period, as considered by the lender. National macro-prudential authorities which are able to distinguish between truly new RRE loans and renegotiated loans are provided with the option to identify renegotiated loans as a separate breakdown. STOCKS= Data for the stocks of RRE loans at reporting date (e.g. end of year) ncu= amount in national currency #= number of contracts y= year(s) Avg= average of the relevant ratio o/w= of which |
BUY-TO-LET LOANS
Overview of buy-to-let loans |
|
FLOWS |
|
Interest coverage ratio at origination (ICR-O) |
|
FLOWS |
Loans disbursed |
|
ncu, # |
|
WEIGHTED AVERAGE |
|
Avg |
o/w first-time buyers |
|
ncu, # |
|
DISTRIBUTION |
|
|
o/w loans in foreign currency |
|
ncu, # |
|
≤ 100 % |
|
ncu, # |
o/w fully amortising |
|
ncu, # |
|
] 100 % ; 125 %] |
|
ncu, # |
o/w partially amortising |
|
ncu, # |
|
] 125 % ; 150 %] |
|
ncu, # |
o/w non-amortising (*2) |
|
ncu, # |
|
] 150 % ; 175 %] |
|
ncu, # |
o/w ≤ 1y initial interest rate fixation period |
|
ncu, # |
|
] 175 % ; 200 %] |
|
ncu, # |
o/w ] 1y; 5y] initial interest rate fixation period |
|
ncu, # |
|
> 200 % |
|
ncu, # |
o/w ] 5y; 10y] initial interest rate fixation period |
|
ncu, # |
|
|
|
|
o/w > 10y initial interest rate fixation period |
|
ncu, # |
|
Loan-to-rent ratio at origination (LTR-O) |
|
FLOWS |
|
|
|
|
WEIGHTED AVERAGE |
|
Avg |
Loan-to-value at origination (LTV-O) |
|
FLOWS |
|
DISTRIBUTION |
|
|
|
|
≤ 5 |
|
ncu, # |
||
WEIGHTED AVERAGE |
|
Avg (in %) |
|
] 5 ; 10] |
|
ncu, # |
DISTRIBUTION |
|
|
|
] 10 ; 15] |
|
ncu, # |
≤ 50 % |
|
ncu, # |
|
] 15 ; 20 ] |
|
ncu, # |
]50 % ; 60 %] |
|
ncu, # |
|
> 20 |
|
ncu, # |
]60 % ; 70 %] |
|
ncu, # |
|
|
|
|
]70 % ; 80 %] |
|
ncu, # |
|
|
|
|
]80 % ; 90 %] |
|
ncu, # |
|
|
|
|
]90 % ; 100 %] |
|
ncu, # |
|
|
|
|
]100 % ; 110 %] |
|
ncu, # |
|
|
|
|
> 110 % |
|
ncu, # |
|
|
|
|
Not available |
|
ncu, # |
|
|
|
|
OWNER OCCUPIED LOANS
Overview of owner occupied loans |
|
FLOWS |
|
Loan-service-to-income at origination (LSTI-O) |
|
FLOWS |
Loans disbursed |
|
ncu, # |
|
WEIGHTED AVERAGE |
|
Avg (in %) |
o/w first-time buyers |
|
ncu, # |
|
o/w first-time buyers |
|
Avg (in %) |
o/w loans in foreign currency |
|
ncu, # |
|
o/w loans in foreign currency |
|
Avg (in %) |
o/w fully amortising |
|
ncu, # |
|
o/w fully amortising |
|
Avg (in %) |
o/w partially amortising |
|
ncu, # |
|
o/w partly amortising |
|
Avg (in %) |
o/w non-amortising (*2) |
|
ncu, # |
|
o/w non-amortising (*2) |
|
Avg (in %) |
o/w ≤ 1y initial interest rate fixation period |
|
ncu, # |
|
o/w ≤ 1y initial interest rate fixation period |
|
Avg (in %) |
o/w ] 1y; 5y] initial interest rate fixation period |
|
ncu, # |
|
o/w ] 1y; 5y] initial interest rate fixation period |
|
Avg (in %) |
o/w ] 5y; 10y] initial interest rate fixation period |
|
ncu, # |
|
o/w ] 5y; 10y] initial interest rate fixation period |
|
Avg (in %) |
o/w > 10y initial interest rate fixation period |
|
ncu, # |
|
o/w > 10y initial interest rate fixation period |
|
Avg (in %) |
|
|
|
|
DISTRIBUTION |
|
|
Current loan-to-value (LTV-C) |
|
FLOWS |
|
≤10 % |
|
ncu, # |
|
|
]10 % ; 20 %] |
|
ncu, # |
||
WEIGHTED AVERAGE |
|
Avg (in %) |
|
]20 % ; 30 %] |
|
ncu, # |
o/w first-time buyers |
|
Avg (in %) |
|
]30 % ; 40 %] |
|
ncu, # |
o/w loans in foreign currency |
|
Avg (in %) |
|
]40 % ; 50 %] |
|
ncu, # |
o/w fully amortising |
|
Avg (in %) |
|
]50 % ; 60 %] |
|
ncu, # |
o/w partially amortising |
|
Avg (in %) |
|
> 60 % |
|
ncu, # |
o/w non-amortising (*2) |
|
Avg (in %) |
|
Not available |
|
ncu, # |
DISTRIBUTION |
|
|
|
|
|
|
≤ 50 % |
|
ncu, # |
|
|
|
|
]50 % ; 60 %] |
|
ncu, # |
|
Loan-to-income at origination (LTI-O) |
|
FLOWS |
]60 % ; 70 %] |
|
ncu, # |
|
|
||
]70 % ; 80 %] |
|
ncu, # |
|
WEIGHTED AVERAGE |
|
Avg |
]80 % ; 90 %] |
|
ncu, # |
|
DISTRIBUTION |
|
|
]90 % ; 100 %] |
|
ncu, # |
|
≤3 |
|
ncu, # |
]100 % ; 110 %] |
|
ncu, # |
|
]3 ; 3,5 ] |
|
ncu, # |
> 110 % |
|
ncu, # |
|
]3,5 ; 4] |
|
ncu, # |
Not available |
|
ncu, # |
|
]4 ; 4,5 ] |
|
ncu, # |
|
|
|
|
]4,5 ; 5] |
|
ncu, # |
|
|
|
|
]5 ; 5,5 ] |
|
ncu, # |
|
|
|
|
]5,5 ; 6] |
|
ncu, # |
|
|
|
|
> 6 |
|
ncu, # |
|
|
|
|
Not available |
|
ncu, # |
Current loan-to-value (LTV-C) |
|
|
STOCKS |
WEIGHTED AVERAGE |
|
|
Avg (in %) |
DISTRIBUTION |
|
|
|
≤ 50 % |
|
|
ncu, # |
]50 % ; 60 %] |
|
|
ncu, # |
]60 % ; 70 %] |
|
|
ncu, # |
]70 % ; 80 %] |
|
|
ncu, # |
]80 % ; 90 %] |
|
|
ncu, # |
]90 % ; 100 %] |
|
|
ncu, # |
]100 % ; 110 %] |
|
|
ncu, # |
> 110 % |
|
|
ncu, # |
Not available |
|
|
ncu, # |
|
|
|
|
Maturities at origination in years |
|
FLOWS |
|
WEIGHTED AVERAGE |
|
Avg (in years) |
|
DISTRIBUTION |
|
|
|
≤ 5y |
|
ncu, # |
|
]5y ; 10y] |
|
ncu, # |
|
]10y ; 15y] |
|
ncu, # |
|
]15y ; 20y] |
|
ncu, # |
|
]20y ; 25y] |
|
ncu, # |
|
]25y ; 30y] |
|
ncu, # |
|
]30y ; 35y] |
|
ncu, # |
|
> 35y |
|
ncu, # |
|
Not available |
|
ncu, # |
|
(*1) Where relevant, non-amortising loans for which redemption vehicles exist should be identified separately.
(*2) Where relevant, non-amortising loans for which redemption vehicles exist should be identified separately.
ANNEX III
INDICATIVE TEMPLATES FOR INDICATORS ON THE COMMERCIAL REAL ESTATE SECTOR
1. Template A: indicators on the physical market
|
Indicator |
|
Breakdown |
|
Frequency |
Property type (1) |
Property location (2) |
||
Physical market |
CRE price index |
Quarterly |
I |
I |
Rental index |
Quarterly |
I |
I |
|
Rental yield index |
Quarterly |
I |
I |
|
Vacancy rates |
Quarterly |
R |
R |
|
Construction starts |
Quarterly |
# |
# |
|
2. Template B: indicators on the financial system’s exposures
|
Indicator |
|
Breakdown |
|
|||||
Frequency |
Property type (3) |
Property location (4) |
Lender type (6) |
Total |
|||||
Flows (8) |
Investments in CRE (10) |
Quarterly |
nc |
nc |
nc |
|
nc |
nc |
|
|
Quarterly |
nc |
nc |
nc |
|
nc |
nc |
||
|
Quarterly |
|
|
nc |
|
nc |
nc |
||
Valuation adjustments on CRE investments |
Quarterly |
nc |
nc |
nc |
|
nc |
nc |
||
Lending to CRE (incl. property under development) |
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
||
|
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
||
Non-performing CRE loans (incl. property under development) |
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
||
|
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
||
Loan loss provisions on CRE lending (incl. property under development) |
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
||
|
Quarterly |
nc |
nc |
|
nc |
nc |
nc |
|
Indicator |
|
Breakdown |
|
|||||
Frequency |
Property type (3) |
Property location (4) |
Lender type (6) |
Total |
|||||
Stocks (9) |
Investments in CRE (10) |
Annually |
nc |
nc |
nc |
|
nc |
nc |
|
|
Annually |
nc |
nc |
nc |
|
nc |
nc |
||
|
Annually |
|
|
nc |
|
nc |
nc |
||
Valuation adjustments on CRE investments |
Annually |
nc |
nc |
nc |
|
nc |
nc |
||
Lending to CRE (incl. property under development) |
Annually |
nc |
nc |
|
nc |
nc |
nc |
||
|
Annually |
nc |
nc |
|
nc |
nc |
nc |
||
Loan loss provisions on CRE lending |
Annually |
nc |
nc |
|
nc |
nc |
nc |
||
Lending to property under development (as part of CRE lending) |
Annually |
nc |
nc |
|
nc |
nc |
nc |
||
|
Annually |
nc |
nc |
|
nc |
nc |
nc |
||
Loan loss provisions on lending to property under development |
Annually |
nc |
nc |
|
nc |
nc |
nc |
3. Template C: indicators on lending standards (11)
|
Indicator |
Frequency |
Weighted average of ratios |
Flows (12) |
Loan-to-value at origination (LTV-O) |
Quarterly |
R |
Interest coverage ratio at origination (ICR-O) |
Quarterly |
R |
|
Debt service coverage ratio at origination (DSCR-O) |
Quarterly |
R |
|
Indicator |
Frequency |
Weighted average of ratios |
Stocks (13) |
Current loan-to-value (LTV-C) |
Annual |
R |
Current interest coverage ratio (ICR-C) |
Annual |
R |
|
Current debt service coverage ratio (DSCR-C) |
Annual |
R |
(1) Property type is broken down into office, retail, industrial, residential and other (all domestic market).
(2) Property location is broken down into domestic prime and domestic non-prime.
I= Index
R= Ratio
#= Square metres
(3) Property type is broken down into office, retail, industrial, residential and other.
(4) Property location is broken down into domestic prime, domestic non-prime, and foreign.
(5) Investor type is broken down into banks, insurance companies, pension funds, investment funds, property companies and others.
(6) Lender type is broken down into banks, insurance companies, pension funds, investment funds, property companies and others.
(7) Nationality is broken down into domestic, European Economic Area and rest of the world.
(8) Flows are on a gross basis for investments, lending and non-performing loans (only new loans/investments are covered without taking into account repayments or reductions on existing amounts).
Flows are on a net basis for valuation adjustments on investments and loan loss provisions.
(9) Stocks data for the stock of CRE investments, valuation adjustments on CRE investments, CRE (non-performing) loans and loan loss provisions on CRE lending at reporting date.
(10) Only in case investments represent a significant share of CRE financing.
nc= Amount in national currency
(11) Excludes property under development, which can be monitored using the loan-to-cost (LTC) ratio.
(12) Flows data for the new production of CRE loans over the reporting period.
(13) Stocks data for the stock of CRE loans at reporting date.
R= Ratio
ANNEX IV
GUIDANCE ON THE METHODS FOR MEASURING AND CALCULATING THE INDICATORS
This Annex provides high-level guidance on the methods for calculating the indicators used in the Templates of Annex II and, where applicable, also Annex III. Its purpose is not to provide detailed technical instructions for completing the Templates covering all possible cases. Moreover, the guidance should be interpreted as covering target definitions and target methods, and in some cases divergences might be justified to accommodate for the specificities of markets or market segments.
1. The loan-to-value ratio at origination (LTV-O)
1. |
LTV-O is defined as:
|
2. |
For the purpose of the calculation, ‘L’:
|
3. |
For the purpose of the calculation, ‘V’:
|
4. |
Where the loan markets for buy-to-let and owner occupied properties are monitored separately, the definition of LTV-O applies, subject to the following exceptions:
|
5. |
National macroprudential authorities should be attentive to the fact that LTV ratios are procyclical in nature and should therefore consider such ratios with care in any risk monitoring framework. They could also investigate the use of additional metrics such as the loan-to-long-term-value, where the value is adjusted according to the long-term development of a market price index. |
2. The current loan-to-value ratio (LTV-C)
1. |
LTV-C is defined as:
|
2. |
For the purpose of the calculation, ‘LC’:
|
3. |
For the purpose of the calculation, ‘VC’:
|
4. |
Where the RRE loan markets for buy-to-let and owner occupied properties are monitored separately, the definition of LTV-C applies, subject to the following exceptions:
|
3. The loan-to-income ratio at origination (LTI-O)
1. |
LTI-O is defined as:
|
2. |
For the purpose of the calculation, ‘L’ has the same meaning as in Section 1(2). |
3. |
For the purpose of the calculation, ‘I’ is the borrower’s total annual disposable income as registered by the credit provider at the moment of the RRE loan origination. |
4. |
In determining a borrower’s ‘disposable income’, addressees are encouraged to comply with definition (1) to the greatest extent possible and with definition (2) as a minimum: Definition (1): ‘disposable income’ = employee income + self-employment income (e.g. profits) + income from public pensions + income from private and occupational pensions + income from unemployment benefits + income from social transfers other than unemployment benefits + regular private transfers (such as alimonies) + gross rental income from real estate property + income from financial investments + income from private business or partnership + regular income from other sources + loan subsidies – taxes – health care/social security/medical insurance premiums + tax rebates. For the purpose of this definition:
Definition (2): ‘disposable income’ = employee income + self-employment income (e.g. profits) – taxes. |
5. |
Where the RRE loan markets for buy-to-let and owner occupied properties are monitored separately, the definition of LTI-O applies, subject to the following exceptions:
|
4. The debt-to-income ratio at origination (DTI-O)
1. |
DTI-O is defined as:
|
2. |
For the purpose of the calculation, ‘D’ includes the total debt of the borrower, whether or not it is secured by real estate, including all outstanding financial loans, i.e. granted by the RRE loan provider and by other lenders, at the moment of the RRE loan origination. |
3. |
For the purpose of the calculation, ‘I’ has the same meaning as in Section 3(4). |
5. The loan service-to-income ratio at origination (LSTI-O)
1. |
LSTI-O is defined as:
|
2. |
For the purpose of the calculation, ‘LS’ is the annual debt servicing costs of the RRE loan, defined as ‘L’ in Section 1(2) at the moment of loan origination. |
3. |
For the purposes of the calculation, ‘I’ has the same meaning as in Section 3(4). |
4. |
Where the RRE loan markets for buy-to-let and owner occupied properties are monitored separately, the definition of LSTI-O applies subject to the following exceptions:
|
6. The debt service-to-income ratio at origination (DSTI-O)
1. |
DSTI-O is defined as:
|
2. |
For the purpose of the calculation, ‘DS’ is the annual debt servicing costs of the total debt of the borrower, defined as ‘D’ in Section 4(2) at the moment of loan origination. |
3. |
For the purposes of the calculation, ‘I’ has the same meaning as in Section 3(4). |
4. |
DSTI-O should be considered as an optional indicator as not in all jurisdictions lenders may have access to the necessary information to calculate its numerator. However, in jurisdictions where lenders do have access to such information (e.g. through credit registers or tax records), macroprudential authorities are strongly encouraged to include also this indicator in their risk monitoring framework. |
7. The interest coverage ratio (ICR)
1. |
ICR is defined as:
|
2. |
For the purposes of the calculation:
|
3. |
The ratio can refer to its value at loan origination (ICR-O) or its current value (ICR-C). |
8. The loan-to-rent ratio at origination (LTR-O)
1. |
LTR-O is defined as:
|
2. |
For the purpose of the calculation:
The net annual rental income should be used for the calculation of the LTR-O. If this information is not available, gross annual rental income may be used as an alternative. |
(1) In the case of property still being constructed, the LTV-O at a given point n can be calculated as:
Where refers to the loan tranches disbursed up to time n,
is the initial value of the real estate collateral (e.g. land) and
represents the change in the property’s value that occurred during the periods up to the disbursement of the n-th loan tranche.
ANNEX V
GUIDANCE ON DEFINITIONS AND INDICATORS RELATED TO COMMERCIAL REAL ESTATE
This Annex provides guidance on specific issues related to the definition of CRE, CRE indicators and in particular on Annex III. Its purpose is not to provide detailed technical instructions for completing the Templates of Annex III covering all possible cases. Moreover, the guidance should be interpreted as covering target definitions and target methods, and in some cases divergences might be justified to accommodate for the specificities of markets or market segments.
1. Definitions of commercial real estate
There is currently no Union-wide definition of CRE that is sufficiently precise for macroprudential purposes.
(a) |
Regulation (EU) No 575/2013 defines RRE in Article 4(1)(75) but does not provide a precise definition of CRE, other than describing it as ‘offices or other commercial premises’ in Article 126. This Regulation also requires that the property value should not depend on the credit quality of the borrower or the performance of the underlying project as regards CRE. |
(b) |
EBA provided a useful additional criterion: the dominant purposes of the property ‘should be linked to an economic activity’ (1). While useful, this criterion is still not precise enough for macroprudential purposes. |
(c) |
Regulation (EU) 2016/867 of the European Central Bank (ECB/2016/13) (2) is another possible source for the CRE definition. However, at this stage, the Regulation defines CRE as all property that is not RRE (as defined in the Regulation mentioned under (a) above). Such definition is too broad for financial stability purposes as the main interest here is the extent to which cash-flows expected from CRE, such as rents, will be sufficient to repay the loans the property has been financed with. |
(d) |
The G20 Data Gaps initiative (3) is a set of 20 recommendations on the enhancement of economics and financial statistics that was launched in order to improve the availability and comparability of economic and financial data following the financial crisis of 2007-08. Recommendation 19 highlights the requirement to improve the availability of both residential and commercial real estate statistics. The follow-up on this initiative, including agreeing a definition of CRE, is still underway and may provide some input to the data required for the purposes of the ESRB. |
(e) |
The Basel Committee on Banking Supervision's consultation document on revisions to the standardised approach for credit risk (4) also defines CRE as the opposite of RRE. An RRE exposure is defined as an exposure secured by an immovable property that has the nature of a dwelling and satisfies all applicable laws and regulations enabling the property to be occupied for housing purposes, i.e. residential property. A CRE exposure is then defined as an exposure secured by any immovable property that is not a residential property. |
In view of the limitations of the definitions set out above, this Recommendation provides a working definition of CRE specifically for macroprudential purposes. It defines CRE as any income-producing immovable property, excluding social housing, property held by end-users and buy-to-let housing.
Whether property under development should be considered as CRE can be debated. In this respect national practices vary. However, the experience of a number of Member States during the recent financial crisis has demonstrated how important it is for financial stability purposes to monitor investments in, and the financing of, this economic activity. Moreover, new property under development is expected to increase the future stock of CRE once completed. For the purposes of this Recommendation, property under development is therefore considered to be a sub-category of CRE.
Social housing is a complex segment of the property market, as it may take different forms across and within countries. It should be excluded from the definition of CRE when the transaction value of properties or the rent applied to tenants in such properties are directly influenced by a public body, which results in rents being lower than those observed in the current market. National authorities should determine the boundary between social housing and private rental sector in their country according to this criterion.
Buy-to-let housing refers to any residential real estate directly owned by private households (5), with the primary aim of being let to tenants. At present, this activity is significant in only a few Member States. Buy-to-let housing is also a border area between RRE and CRE. However, since this activity is typically undertaken by part-time, non-professional landlords with a small property portfolio this can be interpreted for financial stability purposes as belonging more to the RRE sector rather than to the CRE sector. Nevertheless, because of its distinct risk characteristics, national macroprudential authorities are recommended to monitor developments in this sub-market, using a number of additional and specific indicators, should this activity represent a significant source of risks or a significant share of the stock or flows of total RRE lending.
2. Data sources on commercial real estate
2.1. Indicators on the physical CRE market
CRE indicators on the physical market can be obtained through:
(a) |
public sources, e.g. national statistical agencies or land registers; or |
(b) |
private sector data providers that cover a substantial part of the CRE market. |
The ESRB Report on commercial real estate and financial stability in the EU provides an overview of available price indices and possible data sources (6).
2.2. Indicators on the financial system's CRE exposure
The exposures of market participants, at least those of the financial sector, can be collected from supervisory reporting. Some data are already collected by the ECB and EIOPA at national level. However, these are not very detailed. New supervisory reporting templates for banks, i.e. Financial Reporting (FINREP) and Common Reporting (COREP), for insurers under Directive 2009/138/EC of the European Parliament and of the Council (7) and for investment funds under Directive 2011/61/EU of the European Parliament and of the Council (8) can provide more granular insight into financial institutions' exposures to CRE.
The classifications provided in the statistical classification of economic activities in the European Community (NACE rev 2.0) can be useful to proxy financial institutions' exposures to CRE, as they are widely agreed upon by the Union institutions and used in regulatory reporting templates for banks and insurance undertakings. Two sections appear to be relevant in that respect:
(a) Section F: construction, excluding civil engineering; and
(b) Section L: real estate activities, excluding real estate agencies.
The main drawback of using NACE classifications is that they target economic sectors and not loans. For instance, a loan extended to a property company to buy a car fleet will be reported under Section L, even if it is not a CRE loan.
2.3. Use of private sector data
Where national macroprudential authorities use data from a private sector data provider in order to compile the CRE indicators, they are expected to identify the differences in scope and definitions compared to those requested in this Recommendation. They should also be able to provide details on the underlying methodology used by the provider and the sample coverage. Data from a private sector provider should be representative of the overall market and the relevant breakdowns set out in Recommendation D:
(a) |
property type; |
(b) |
property location; |
(c) |
investor type and nationality; |
(d) |
lender type and nationality. |
3. Relevant breakdowns of the indicators
With respect to the relevant breakdowns set out in Recommendation D, national macroprudential authorities should be able to provide an assessment of the relevance of such breakdowns for their CRE market when they use them for monitoring purposes, taking also into account the principle of proportionality.
‘Property type’ refers to the primary use of a commercial property. For CRE indicators, this breakdown should include the following categories:
(a) |
residential, e.g. multi-household premises; |
(b) |
retail, e.g. hotels, restaurants, shopping malls; |
(c) |
offices, e.g. a property primarily used as professional or business offices; |
(d) |
industrial, e.g. property used for the purposes of production, distribution and logistics; |
(e) |
other types of commercial property. |
If a property has a mixed 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 can be classified according to its dominant use.
‘Property location’ refers to the geographical breakdown (e.g. by regions) or to real estate submarkets, which shall also include prime and non-prime locations. A prime location is generally considered the best location in a particular market, which is also reflected in the rental yield (typically the lowest in the market). For office buildings this could be a central location in a major city. For retail buildings this may refer to a city centre with many pedestrians or a centrally-placed shopping centre. For logistics buildings this may refer to a location where the necessary infrastructure and services are in place, which has excellent access to transport networks.
‘Investor type’ refers to broad investor categories, such as:
(a) |
banks; |
(b) |
insurance companies; |
(c) |
pension funds; |
(d) |
investment funds; |
(e) |
property companies; |
(f) |
others. |
It is probable that only data on the recorded borrower or investor will be available. However, national macroprudential authorities should be aware that the recorded borrower or investor can be different from the ultimate borrower or investor, which is where the final risk lies. Hence, authorities are encouraged to monitor also information on the ultimate borrower or investor whenever possible, e.g. through information gathered from market participants, in order to have a better understanding of the behaviour of market participants and risks.
‘Lender type’ refers to broad lender categories, such as:
(a) |
banks, including ‘bad banks’; |
(b) |
insurance companies; |
(c) |
pension funds. |
National macroprudential authorities may need to adjust the list of investor and lender types in order to reflect the characteristics of the local CRE sector.
‘Nationality’ refers to the country of incorporation of the market participant. The nationality of investors and lenders should be broken down into at least the three following geographical categories:
(a) |
domestic; |
(b) |
rest of the European Economic Area; |
(c) |
rest of the world. |
National macroprudential authorities should be aware that the recorded investor's or lender's nationality can be different from the ultimate investor's or lender's nationality where the final risk lies. Hence, authorities are encouraged to also monitor information on the ultimate lender's or investor's nationality, e.g. through information gathered from market participants.
4. Methods for calculating the physical market indicators
CRE price refers to a constant quality numéraire, i.e. the market value of property stripped of quality changes such as depreciation (and obsolescence) or appreciation (e.g. renovation) by means of quality adjustment.
Guidance from work initiated by Eurostat advises that pricing data should be collected from actual transactions. Where these are not available and/or fully representative they may be approximated by appraisal or valuation data as long as these data reflect the current market price, and not any sustainable price measurement approach.
5. Assessment of financial system exposures to commercial real estate
The financial system's exposure to CRE consists of both lending, often by banks and sometimes also insurance companies, and investments, often made by insurance companies, pension funds and investment funds. Investments can refer to both direct CRE holdings, e.g. possessing legal title to a CRE property, and indirect CRE holdings, e.g. through securities and investment funds. In case a lender or investor uses a special purpose vehicle (SPV) as a dedicated CRE financing technique, such lending or investments should be considered as direct CRE lending or holdings (‘look-through’ approach).
When assessing these exposures for the system, as a whole, national macroprudential authorities should be aware of the risk of double-counting. Investors can invest both directly and indirectly in CRE. For example, pension funds and insurance companies often invest indirectly in CRE.
It may also be more difficult to capture exposures of foreign market participants, which may make up a significant part of the market (9). Since these market participants are important to the functioning of the CRE market, monitoring of their activities is advisable.
Since losses from CRE activities are often concentrated in CRE lending by banks, national macroprudential authorities are encouraged to pay particular attention to this activity in their monitoring.
6. Methods for calculating LTV
Annex IV sets out the methods for calculating LTV-O and LTV-C. However, there are a number of specificities to take into account when these ratios are calculated for CRE.
In the case of a syndicated loan, the LTV-O should be calculated as the initial amount of all loans granted to the borrower relative to the value of the property at origination. Where several properties are concerned, the LTV-O should be calculated as the ratio of the initial loan(s) amount to the total value of the properties concerned.
As the number of properties is much smaller and properties are more heterogeneous in the CRE sector than in the RRE sector, it is more appropriate to calculate the LTV-C on the basis of a value assessment of the individual properties rather than using a value or price index.
Finally, national macroprudential authorities need to monitor the distribution of LTV with a particular focus on the riskiest loans, i.e. those with the highest LTV, as losses often result from such tail risk.
7. Methods for calculating the interest coverage ratio (ICR) and debt service coverage ratio (DSCR)
The interest coverage ratio (ICR) and the debt service coverage ratio (DSCR) refer to rental income generated by a CRE property or set of properties, net of taxes and operating expenses that the borrower must incur in order to maintain the property's value.
ICR is defined as:
For the purposes of calculating ICR:
(a) |
‘net annual rental income’ includes the annual rental income accruing from renting CRE to tenants net of taxes and any operational expenses to maintain the property's value. |
(b) |
‘annual interest costs’ are annual interest costs associated with the loan secured by the CRE property or set of properties. |
The ICR's purpose is to measure the extent to which the income generated by a property is sufficient to pay for the interest expenses incurred by a borrower to purchase that property. ICR should therefore be analysed at property level.
DSCR is defined as:
For the purpose of calculating DSCR:
(a) |
‘net annual rental income’ is the annual rental income accruing from renting CRE to tenants net of any taxes and operational expenses to maintain the property's value. |
(b) |
‘annual debt service’ is the annual debt service associated with the loan secured by the CRE property or set of properties. |
The DSCR's purpose is to assess the weight of the overall debt burden that a property generates for a borrower. Hence, the denominator includes not only interest expenses, but also loan amortisation, i.e. principal repayments. The main issue for such an indicator is whether it should be calculated at property level or at borrower level. CRE financing is typically provided on a non-recourse basis, i.e. the lender is only entitled to repayment from the income of the property and not from the borrower's other income or assets. Therefore it is more realistic and appropriate to calculate the DSCR at property level. Furthermore, focusing on a borrower's overall income would raise important consolidation issues which would make it more difficult to define a metric that is comparable across Member States.
8. Additional indicators relevant for property under development
For CRE property under development, instead of the LTV at origination, national macroprudential authorities may instead monitor the loan-to-cost ratio (LTC). The LTC represents the initial amount of all loans granted in relation to the costs associated with the construction of the CRE property until completion.
In addition, national macroprudential authorities should focus their monitoring on the riskiest developments, e.g. those that experience very low pre-let or pre-sale ratios. For any building still being constructed, the pre-let ratio equals the surface area that has already been let by the property developer at the time the loan is issued relative to the total surface area that will be available once the property has been completed; similarly, the pre-sale ratio equals the surface area that has already been sold by the property developer at the time the loan is issued relative to the total surface area that will be available once the property has been completed.
9. Annual publication of commercial real estate exposures by the ESAs
Drawing on information available from regulatory reporting templates, the ESAs are recommended to disclose at least annually aggregated information on the exposures to the different national CRE markets in the Union for the entities within the scope of their supervision and on solo basis. Such public disclosure is expected to enhance the knowledge of national macroprudential authorities on the activity of entities from other Member States on their domestic CRE market. In case there are any concerns about the scope or quality of the published data, such publication should be accompanied with the appropriate comments.
As a general rule, the ESAs should make it possible for any national macroprudential authority in the Union to assess the exposures of all Union financial institutions to its national market. This implies that data collected for all financial institutions in the Union should be aggregated at country level.
In disclosing such aggregated information, the ESAs should make use of information in regulatory reporting templates that provide a geographical breakdown of credit exposures and/or (direct and indirect) investments. When reporting templates provide a breakdown by NACE codes (10), CRE could be referred to as both the ‘F’ and ‘L’ Sections, although strictly speaking some sub-categories would need to be excluded following the CRE definition adopted in this Recommendation.
(1) See: EBA question ID 2014_1214 of 21 November 2014.
(2) Regulation (EU) 2016/867 of the European Central Bank of 18 May 2016 on the collection of granular credit and credit risk data (ECB/2016/13) (OJ L 144, 1.6.2016, p. 44).
(3) Financial Stability Board and International Monetary Fund, The financial crisis and information gaps — report to the G-20 finance ministers and central bank governors, 29 October 2009.
(4) Basel Committee on Banking Supervision, Revisions to the Standardised Approach to credit risk — second consultative document, December 2015.
(5) According to point 2.118 of Chapter 2 of Annex A to Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union (OJ L 174, 26.6.2013, p. 1), ‘the households sector […] consists of individuals or groups of individuals as consumers and as entrepreneurs producing market goods and non-financial and financial services (market producers) provided that the production of goods and services is not by separate entities treated as quasi-corporations. It also includes individuals or groups of individuals as producers of goods and non-financial services for exclusively own final use.’
(6) ESRB, ‘Report on Commercial Real Estate and Financial Stability in the EU’, December 2015, in particular Annex II, Section 2.2.
(7) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).
(8) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).
(9) ESRB, Report on Commercial Real Estate and Financial Stability in the EU, December 2015, in particular Section 2.3 and Box 1.
(10) Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/43 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Austria
(ESRB/2016/05)
(2017/C 31/02)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for Austria:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Austria as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the robust growth, particularly recently, in residential real estate prices and mortgage credit and the risk of a further loosening in lending standards.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
(2) Based on estimates from the Oesterreichische Nationalbank (OeNB) and the European Central Bank (ECB).
(3) Especially in Vienna homeownership is low — 82 % of households are renters.
(4) Following the ESRB’s decision to issue this warning, the Austrian FMSB discussed sustainable lending standards in residential real estate during its meeting on 23 September 2016.
(5) The FMSB’s Advice is available publically: https://www.fmsg.at/en/publications/warnings-and-recommendations/advice-2-2016.html
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/45 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Belgium
(ESRB/2016/06)
(2017/C 31/03)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for Belgium:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Belgium as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the fast increase in overall household indebtedness combined with significant groups of already highly indebted households, against the background of a significant increase in residential real estate prices over the past few years.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
(2) Application of a five percentage point add-on to the risk weights of Belgian mortgage loans for credit institutions using internal ratings-based models for the computation of capital requirements. That measure came into force with the Royal Decree of 8 December 2013 — https://www.nbb.be/en/articles/arrete-royal-du-8-decembre-2013-portant-approbation-du-reglement-du-22-octobre-2013-de-la — and was then implemented in 2014 under Article 458 of the EU Capital Requirements Regulation. This measure was extended for 1 year in May 2016 (Royal Decree of 31 May 2016 — https://www.nbb.be/en/financial-oversight/macroprudential-supervision/macroprudential-instruments/real-estate).
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/47 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Denmark
(ESRB/2016/07)
(2017/C 31/04)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB's vulnerability assessment highlights the following for Denmark:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Denmark as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the robustly increasing residential real estate prices — in particular in the major cities — in combination with highly indebted households. In addition, if risks were to materialise, there could be potential spill-over effects to other countries in the Nordic-Baltic region.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
(2) Meaning there is match funding between the bonds and the mortgage loans issued by mortgage credit institutions.
(3) Other types of assets, for example cars, might also be pledged as collateral, but this is not reported in the figures being referred to here.
(4) The supervisory diamond sets out a number of benchmarks that the Danish FSA generally considers to indicate mortgage-credit activities that have a higher risk profile. It consists of five indicators with corresponding limits on the risks of the institutions: large exposures; lending growth; interest rate risk of the borrower; interest-only lending; short-term funding.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/49 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Finland
(ESRB/2016/08)
(2017/C 31/05)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for Finland:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Finland as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the high and increasing household indebtedness, especially among some groups of households. In addition, if risks were to materialise, there could be potential spill-over effects to other countries in the Nordic-Baltic region.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/51 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Luxembourg
(ESRB/2016/09)
(2017/C 31/06)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for Luxembourg:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Luxembourg as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the combination of high residential real estate prices and increasing household indebtedness.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/53 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of the Netherlands
(ESRB/2016/10)
(2017/C 31/07)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for the Netherlands:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of the Netherlands as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the persistently high household debt levels combined with low mortgage collateralisation. In particular, there is a large group of households, especially younger mortgagors, which have debt levels that exceed the value of their home.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/55 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of Sweden
(ESRB/2016/11)
(2017/C 31/08)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB’s vulnerability assessment highlights the following for Sweden:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of Sweden as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. From a macroprudential perspective, the ESRB considers the main vulnerabilities to be the rapidly growing residential real estate prices that appear to be overvalued, and high and increasing indebtedness especially among some groups of households. In addition, if risks were to materialise, there could be potential spill-over effects to other countries in the Nordic-Baltic region.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/57 |
WARNING OF THE EUROPEAN SYSTEMIC RISK BOARD
of 22 September 2016
on medium-term vulnerabilities in the residential real estate sector of the United Kingdom
(ESRB/2016/12)
(2017/C 31/09)
THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Articles 3 and 16 thereof,
Whereas:
(1) |
Past experience in many countries shows that the manifestation of residential real estate vulnerabilities may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spill-overs to other countries. |
(2) |
The European Systemic Risk Board (ESRB) has recently concluded a systematic and forward-looking Union-wide assessment of vulnerabilities relating to residential real estate. In this context, the ESRB has identified in eight countries certain medium-term vulnerabilities as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. |
(3) |
The ESRB's vulnerability assessment highlights the following for the United Kingdom:
|
HAS ADOPTED THIS WARNING:
The ESRB has identified medium-term vulnerabilities in the residential real estate sector of the United Kingdom as a source of systemic risk to financial stability, which may have the potential for serious negative consequences for the real economy. Currently, there is a high degree of uncertainty about the medium-term outlook for the UK housing market. However, from a macroprudential perspective, the ESRB considers there to be risks under different housing market scenarios — either through the crystallisation of accumulated vulnerabilities, particularly related to household indebtedness and the interaction with elevated residential real estate prices, or through the further build-up of vulnerabilities. The appropriate policy response is likely to differ between these two scenarios. Therefore, it will be important for the UK authorities to monitor developments closely and adjust macroprudential policy as necessary in light of them.
Done at Frankfurt am Main, 22 September 2016.
Francesco MAZZAFERRO
Head of the ESRB Secretariat
On behalf of the General Board of the ESRB
(1) OJ L 331, 15.12.2010, p. 1.
II Information
INFORMATION FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES
European Commission
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/59 |
Non-opposition to a notified concentration
(Case M.8327 — Fairfax/Sagard Holdings/PSG)
(Text with EEA relevance)
(2017/C 31/10)
On 24 January 2017, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:
— |
in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
— |
in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32017M8327. EUR-Lex is the online access to European law. |
IV Notices
NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES
European Commission
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/60 |
Euro exchange rates (1)
30 January 2017
(2017/C 31/11)
1 euro =
|
Currency |
Exchange rate |
USD |
US dollar |
1,0630 |
JPY |
Japanese yen |
121,76 |
DKK |
Danish krone |
7,4375 |
GBP |
Pound sterling |
0,84935 |
SEK |
Swedish krona |
9,4390 |
CHF |
Swiss franc |
1,0669 |
ISK |
Iceland króna |
|
NOK |
Norwegian krone |
8,8758 |
BGN |
Bulgarian lev |
1,9558 |
CZK |
Czech koruna |
27,022 |
HUF |
Hungarian forint |
310,80 |
PLN |
Polish zloty |
4,3310 |
RON |
Romanian leu |
4,5008 |
TRY |
Turkish lira |
4,0561 |
AUD |
Australian dollar |
1,4109 |
CAD |
Canadian dollar |
1,3983 |
HKD |
Hong Kong dollar |
8,2476 |
NZD |
New Zealand dollar |
1,4668 |
SGD |
Singapore dollar |
1,5177 |
KRW |
South Korean won |
1 252,27 |
ZAR |
South African rand |
14,4510 |
CNY |
Chinese yuan renminbi |
7,3103 |
HRK |
Croatian kuna |
7,4773 |
IDR |
Indonesian rupiah |
14 173,38 |
MYR |
Malaysian ringgit |
4,7094 |
PHP |
Philippine peso |
52,899 |
RUB |
Russian rouble |
63,7792 |
THB |
Thai baht |
37,492 |
BRL |
Brazilian real |
3,3318 |
MXN |
Mexican peso |
22,0850 |
INR |
Indian rupee |
72,2315 |
(1) Source: reference exchange rate published by the ECB.
31.1.2017 |
EN |
Official Journal of the European Union |
C 31/61 |
COMMISSION DECISION
of 24 January 2017
establishing the Commission Expert Group ‘Platform on Animal Welfare’
(Text with EEA relevance)
(2017/C 31/12)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Whereas:
(1) |
Article 13 of the Treaty on the Functioning of the European Union recognises animals as sentient beings and requires the Union and the Member States to pay full regard to the welfare requirements of animals in formulating and implementing Union agriculture, fisheries, transport, internal market, research and technical development and space policies while respecting the legislative or administrative provisions of the Member States relating in particular to religious rites, cultural traditions and regional heritage. |
(2) |
In accordance with Article 11(2) of the Treaty on European Union, the institutions are to maintain an open, transparent and regular dialogue with representative associations and civil society. |
(3) |
Article 26 of the Treaty on the Functioning of the European Union provides that the Union is to adopt measures with the aim of establishing and ensuring the functioning of the internal market with free movement of goods, persons, services and capital. |
(4) |
Article 38 of the Treaty on the Functioning of the European Union assigns the Union the task of defining and implementing a common agriculture policy. |
(5) |
Article 179 of the Treaty on the Functioning of the European Union provides that the Union has the objective of strengthening its scientific and technological bases by achieving a European research area. According to Article 180(b) of the said Treaty the Union is to promote the cooperation in the field of Union research, technological development and demonstration with third countries and international organisations. |
(6) |
In 2011 the Commission set up an expert group on animal welfare (1) with the aim of assisting and advising the Commission on issues relating to the animal welfare legislation and of facilitating the exchange of information, experience and good practices in the area of animal welfare legislation. |
(7) |
The European Parliament (2) and the Council of the European Union (3) have called for the establishment of a Union platform on animal welfare in order to improve dialogue among stakeholders as to share experience, expertise and views. |
(8) |
To answer Parliament’s and Council’s requests, a new expert group named ‘Platform on Animal Welfare’ (‘the Platform’) should assist the Commission and help to hold regular dialogue on Union matters directly related to animal welfare such as enforcement of the legislation, exchanges of scientific knowledge, innovations and good animal welfare practices/initiatives, or animal welfare international activities. The Platform should also assist the Commission on Union relevant topics which may interact with animal welfare issues such as trade, antimicrobial resistance, food safety, research or environment. Since the Platform will have the same mandate than the existing expert group on animal welfare it is not necessary to maintain the later one. |
(9) |
The Platform should work with due consideration to the activities of other relevant dialogue groups or networks on animal welfare such as working groups and networks of the European Food Safety Authority or the World Organisation for Animal Health Regional Platform on animal welfare for Europe. |
(10) |
The Platform should be composed of representatives from competent authorities from all Member States, business organisations involved at the European Union level in the food supply chain as well as in keeping of animals for other farming purposes, organisations from the civil society involved at the European Union level in animal welfare as well as from academic and research institutes working on animal welfare sciences. The membership of the Platform should be also open to experts from the competent authorities from non-EU countries which are contracting parties to the Agreement on the European Economic Area as well from international intergovernmental organisations. |
(11) |
Rules on disclosure of information by members of the Platform should be laid down. |
(12) |
Personal data should be processed in accordance with Regulation (EC) No 45/2001 of the European Parliament and of the Council (4). |
(13) |
It is appropriate to fix a period for the application of this Decision. The Commission will in due time consider the advisability of an extension of the Decision, |
HAS DECIDED AS FOLLOWS:
Article 1
Subject matter
A group of experts named ‘Platform on Animal Welfare’ (‘the Platform’) is hereby set up.
Article 2
Tasks
The Platform’s tasks shall be:
(a) |
to assist the Commission with the development and exchange of coordinated actions which shall have the aim of contributing to the implementation and application of European Union legislation related to animal welfare and the understanding, within and outside the Union, of the Union legislation as well as international standards on animal welfare; |
(b) |
to facilitate the development and the use of voluntary commitments on animal welfare improvement by businesses; |
(c) |
to contribute to the promotion of Union standards on animal welfare as to valorise the market value of Union products at global level; |
(d) |
to encourage dialogue between competent authorities, businesses, civil society, academia, scientists, and international intergovernmental organisations on Union relevant topics related to animal welfare; |
(e) |
to promote exchange of experiences and good practices, scientific knowledge and innovations on related to animal welfare relevant for the Union; |
(f) |
to share information on policy development in the fields and on activities mentioned above. |
Article 3
Consultation
The Commission may consult the Platform on any matter related to animal welfare relevant for the Union.
Article 4
Membership
1. The Platform shall be composed of not more than 75 members.
2. The Platform shall comprise the following members:
(a) |
competent authorities of the Member States of the European Union and of those non-EU countries which are contracting parties to the Agreement on the European Economic Area (‘the EEA members’) responsible for animal welfare; |
(b) |
business and professional organisations having activities at Union level in the food supply chain where animals or animal products are involved as well as in the keeping of animals for other farming purposes; |
(c) |
organisations from the civil society having activities at Union level in relation to animal welfare; |
(d) |
Independent experts from academic and research institutes having activities on animal welfare sciences which have an impact on Union policies; |
(e) |
International intergovernmental organisations having activities on animal welfare (5); |
(f) |
the European Food Safety Authority. |
3. Members listed under paragraph 2(d) are appointed in a personal capacity and shall act independently and in the public interest.
4. Members listed under paragraph 2(b) and (c), shall be selected according to the procedure laid down in Article 5. They shall nominate their representatives in the Platform at senior-level and shall be responsible for ensuring that their representatives are permanent and provide a sufficiently high level of expertise. The Commission may refuse a representative nominated by these members if it considers, on the basis of justified grounds specified in the rules of the call of applications of the Platform, that the nomination is not appropriate. In such case, the organisation concerned shall be asked to appoint another representative.
6. Members listed under paragraph 2(a), (e) and (f) shall nominate their representatives responsible for animal welfare and shall be responsible for ensuring that their representatives provide a sufficiently high level of expertise.
7. Members who are no longer capable of contributing effectively to the expert group’s activities, who, in the opinion of Directorate-General for Food and Health Safety, do not comply with the conditions set out in Article 339 of the Treaty on the Functioning of the European Union or who resign, shall no longer be invited to participate in any meetings of the Platform and may be replaced for the remainder of their term of office.
Article 5
Selection process
1. The selection of the Platform’s members listed under Article 4(2)(b) to (d) shall be carried out via a public call for applications, to be published on the Register of Commission expert groups and other similar entities (‘the Register of expert groups’). In addition, the call for applications may be published through other means, including on dedicated websites.
The call for applications shall clearly outline the selection criteria, including the required expertise and the interests to be represented in relation to the work to be performed. The minimum deadline for applications shall be four weeks.
2. Members listed under Article 4(2)(d) shall disclose any circumstances that could give rise to a conflict of interest. In particular, the Commission shall require those individuals to submit a declaration of interests (‘DOI’) form on the basis of the standard DOI form for expert groups, together with an updated curriculum vitae (CV), as part of their application. Submission of a duly completed DOI form shall be necessary in order to be eligible to be appointed as a member in a personal capacity. The conflict of interest assessment shall be performed in compliance with the Commission’s horizontal rules on expert groups (‘the horizontal rules’) (6).
3. Registration in the Transparency Register is required in order for organisations listed under Article 4(2)(b) and (c) to be appointed.
4. Members listed under Article 4(2)(b) to (d) shall be appointed by the Director-General for Health and Food Safety from applicants with adequate competence in the areas referred to in Article 2 and who have responded to the call for applications.
5. Members shall be appointed until 31 December 2019. They shall remain in office until the end of their term of office. Their term of office may be renewed.
6. As regards members listed under Article 4, paragraph (2)(d), the Director-General for Health and Food Safety shall appoint alternate members, in accordance with the same conditions as members, who shall automatically replace any members who are absent or indisposed. The Director-General shall also establish, after their consent, a reserve list of suitable candidates that may be used to appoint members’ replacements.
Article 6
Chair
The Platform shall be chaired by the Director-General for Health and Food Safety or his/her representative.
Article 7
Operation
1. The Platform shall act at the request of the Chair, in compliance with the horizontal rules.
2. In principle, the Platform shall meet at least twice a year at the premises of the Commission and whenever the Commission considers a meeting necessary.
3. The Commission services shall provide secretarial services. Commission officials from other departments with an interest in the works of the Platform may attend meetings of the Platform and its sub-groups.
4. In agreement with the Chair, the Platform may, by simple majority of its members, decide that deliberations shall be public.
5. Minutes on the discussion on each point on the agenda and an the conclusions of the debates shall be meaningful and complete. Minutes shall be drafted by the secretariat under the responsibility of the Chair.
6. The Platform shall adopt reports or conclusions by consensus. In the event of a vote, the outcome of the vote shall be decided by simple majority of the members. Members who have voted against shall have the right to have a document summarising the reasons for their position annexed to the corresponding report or conclusion.
Article 8
Sub-groups
1. The Director-General for Health and Food Safety may set up sub-groups for the purpose of examining specific questions on the basis of terms of reference defined by the Commission. Sub-groups shall operate in compliance with the horizontal rules and shall report to the Platform. They shall be dissolved as soon as their mandate is fulfilled.
2. The members of sub-groups that are not members of the Platform shall be selected via a public call for applications, in compliance with Article 5 and the horizontal rules (7).
Article 9
Invited experts
The Chair may invite experts with specific expertise with respect to a subject matter on the agenda to take part in the work of the Platform or the sub-groups, on an ad hoc basis.
Article 10
Observers
1. Individuals, organisations or public entities may be granted an observer status, in compliance with the horizontal rules, either by direct invitation or as a result of a call for applications.
2. Organisations or public entities appointed as observers shall nominate their representatives.
3. Observers and their representatives may be permitted by the Chair to take part in the discussions of the Platform and provide expertise. However, they shall not have voting rights and shall not participate in the drafting of reports or conclusions of the Platform.
4. The Platform shall not have more than five observers.
Article 11
Rules of procedure
On a proposal by and in agreement with the Chair the Platform shall adopt its rules of procedure by simple majority of its members, on the basis of the standard rules of procedure for expert groups, in compliance with the horizontal rules.
Article 12
Professional secrecy and handling of classified information
The members of the Platform and their representatives, as well as invited experts and observers, are subject to the obligation of professional secrecy, which by virtue of the Treaties and the rules implementing them applies to all members of the institutions and their staff, as well as to the Commission’s rules on security regarding the protection of Union classified information, laid down in Commission Decisions (EU, Euratom) 2015/443 (8) and (EU, Euratom) 2015/444 (9). Should they fail to respect these obligations, the Commission may take all appropriate measures.
Article 13
Relationship with the European Parliament
The European Parliament shall be kept informed of the Platform’s work. Upon request of the European Parliament and in accordance with the modalities laid down in the Framework Agreement on relations between the European Parliament and the European Commission (10), the Commission may invite the Parliament to send experts to attend the meetings.
Article 14
Transparency
1. The Platform and sub-groups shall be registered in the Register of expert groups.
2. As concerns the group composition, the following data shall be published on the Register of expert groups:
(a) |
the names of individuals appointed in a personal capacity; |
(b) |
the names of member organisations; the interest represented shall be disclosed; |
(c) |
the names of other public entities; |
(d) |
the names of observers. |
3. All relevant documents, including the agendas, the minutes and the participants’ submissions, shall be made available either on the Register of expert groups or via a link from the Register to a dedicated website, where this information can be found. Access to dedicated websites shall not be submitted to user registration or any other restriction. In particular, the agenda and other relevant background documents shall be published in due time ahead of the meeting, followed by timely publication of minutes. Exceptions to publication shall only be foreseen where it is deemed that disclosure of a document would undermine the protection of a public or private interest as defined in Article 4 of Regulation (EC) No 1049/2001 of the European Parliament and Council (11).
Article 15
Meeting expenses
1. Participants in the activities of the Platform and the sub-groups shall not be remunerated for the services they offer.
2. Travel and subsistence expenses incurred by participants in the activities of the Platform and the sub-groups shall be reimbursed by the Commission. Reimbursement shall be made in accordance with the provisions in force within the Commission and within the limits of the available appropriations allocated to the Commission departments under the annual procedure for the allocation of resources.
Article 16
Applicability
This Decision shall apply until 31 December 2019.
Done at Brussels, 24 January 2017.
For the Commission
Vytenis ANDRIUKAITIS
Member of the Commission
(1) Expert group on animal welfare E02668.
(2) European Parliament resolution on a new Animal Welfare Strategy for 2016-2020 of 24 November 2015 (2015/2957(RSP)).
(3) 3464th Council meeting — Agriculture and Fisheries — 17 May 2016.
(4) Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (OJ L 8, 12.1.2001, p. 1).
(5) E.g. World Organisation for Animal Health (OIE), the Food and Agriculture Organisation of the United Nations (FAO).
(6) Commission Decision of 30.5.2016 establishing horizontal rules on the creation and operation of Commission expert groups.
(7) See Articles 10 and 14.2 of the horizontal rules.
(8) OJ L 72, 17.3.2015, p. 41.
(9) OJ L 72, 17.3.2015, p. 53.
(10) OJ L 304, 20.11.2010, p. 47.
(11) Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ L 145, 31.5.2001, p. 43).