for exposures secured against domestic residential and commercial immovable property pursuant to Regulation (EU) No 575/2013 (“CRR”)
Pursuant to Article 125(3) and Article 126(3) CRR (credit risk: standardised approach) or Article 199(3) and (4) CRR (IRB approach) credit institutions may, in assessing whether exposures are fully and completely secured by property collateral, deviate from the principle requirement, that the risk of the debtor is not materially dependent on the performance of the underlying property or project, if the competent authority in the Member State in question, in which the property is located, has published proof that a well developed and well established property market exists, the loss rates of which are below specific upper limits.
The following upper limits are prescribed:
- losses stemming from loans collateralised up to 80% (or 50%) of the market value by residential property (or commercial immovable property) do not exceed 0.3 % of the outstanding loans collateralised by residential property (or commercial immovable property) in any given year;
- the total losses stemming from loans collateralised by residential property (or commercial immovable property) do not exceed 0.5 % of the outstanding loans collateralised by residential property (or commercial immovable property) in any given year.
Since 2006 the FMA has been collecting data on the realised losses from property-based collateral from a representative selection of credit institutions in order to assess the Austrian property market. The collection of data focuses on loans where default occurred so far in the past that their property-based collateral has already been realised, i.e. the real amount of the loss was determined. Since June 2014, data has been available for all credit institutions in Austria on the basis of reporting pursuant to Article 101 CRR in conjunction with Article 12 and Annex VI of Implementing Regulation (EU) 680/2014 (IP reporting). This harmonized, semi-annual reporting requirement is based on estimates of loss within the reporting period. The FMA’s annual data collection was continued until 2016 when it was replaced by the full collection on the basis of IP reporting data. Under the new Implementing Regulation (EU) 2021/451, IP losses are reported on an annual basis.
It is hereby determined, that the maximum loss rates for the Austrian property market that were collected to date by the FMA are lower than the aforementioned thresholds, thereby meaning – until further notice – that deviation from point b) of Article 125(2), point b) of Article 126(2) and point b) of Article 199(2) CRR is permissible.