CRR/CRD IV enters into force in Norway
CRR/CRD IV enters into force in Norway 31.12.2019. This regulation was implemented as a part of the EEA-agreement with constitutional reservations in March 2019, now the constitutional reservations have been lifted. Additionally, a range of regulation closely connected to CRR/CRD IV will enter into force at the same time.
The systemic buffer requirement for the banks will be increased from three to four and a half percent. However, the amendments should not increase the overall capital requirement for the banks according to the Minister of Finance. The amendments to the bank’s capital requirements will be effective from 31 December 2020, however for the smaller banks there will be a two-year transition rule. The implementation of the revision will implement the SME discount factor lowering the banks’ capital requirements for lending to small and medium-sized enterprises. Furthermore, the Basel I-floor will be repealed. Overall, the implementation of this regulation will most likely lead to changes as to how Norwegian banks calculate their capital adequacy ratios in order to uphold the current requirements in practice.
In addition to this, it has been deemed that the Norwegian systemic risk buffer requirement should apply to foreign banks in Norway in order to promote stability and fair competition. Foreign banks hold about 25 % of the total market in Norway. The Ministry of Finance will notify the EU and the relevant EEA authorities of the new systemic buffer requirement and request the ESRB (European Systemic Risk Board) to issue a recommendation to other EEA states to reciprocate the requirement. The new systemic risk buffer requirement will formally be adopted after the notification procedures vis-à-vis EU and EEA authorities have been completed.