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Having regard to the proposal from the Commission, - page 13 / 23

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      • 17.11.2009

        EN

        • (b)

          paragraph 2 is amended as follows:

Official Journal of the European Union

26. Article 115 is replaced by the following:

L 302/109

(i)

the first subparagraph is replaced by the following:

‘Article 115

‘Subject to paragraph 3 of this Article, a credit insti­ tution permitted to use own estimates of LGDs and conversion factors for an exposure class under Articles 84 to 89 shall be permitted, where it is able to the satisfaction of the competent authorities to estimate the effects of financial collateral on their exposures separately from other LGD-relevant aspects, to recognise such effects in calculating the

value of exposures Article 111(1).’;

for

the

purposes

of

(ii) the fourth subparagraph is replaced by the following:

‘Credit institutions permitted to use own estimates of LGDs and conversion factors for an exposure class under Articles 84 to 89 which do not calcu­ late the value of their exposures using the method referred to in the first subparagraph of this para­ graph may use the Financial Collateral Comprehen­ sive Method or the approach set out in Article 117(1)(b) for calculating the value of exposures.’;

  • (c)

    paragraph 3 is amended as follows:

    • (i)

      the first subparagraph is replaced by the following: ‘A credit institution that makes use of the Financial

Collateral Comprehensive Method or is permitted to use the method described in paragraph 2 of this Article in calculating the value of exposures for the purposes of Article 111(1), shall conduct periodic stress tests of their credit-risk concentrations, including in relation to the realisable value of any collateral taken.’;

(ii) the fourth subparagraph is replaced by the following:

‘In the event that such a stress test indicates a lower realisable value of collateral taken than would be permitted to be taken into account while making use of the Financial Collateral Comprehensive Method or the method described in paragraph 2 of this Article as appropriate, the value of collateral permitted to be recognised in calculating the value of exposures for the purposes of Article 111(1) shall be reduced accordingly.’;

(iii) in the fifth subparagraph, point (b) is replaced by the following:

‘(b) policies and procedures in the event that a stress test indicates a lower realisable value of collateral than taken into account while mak­ ing use of the Financial Collateral Comprehen­ sive Method or the method described in paragraph 2; and’;

(d) paragraph 4 is deleted;

1.

For the purpose of this Section, a credit institution may

reduce the exposure value by up to 50 % of the value of the residential property concerned, if either of the following con­

ditions is met:

  • (a)

    the exposure is secured, by mortgages on residential property or by shares in Finnish residential housing companies, operating in accordance with the Finnish Housing Company Act of 1991 or subsequent equiva­ lent legislation;

  • (b)

    the exposure relates to a leasing transaction under which the lessor retains full ownership of the residential prop­ erty leased for as long as the lessee has not exercised his option to purchase.

The value of the property shall be calculated, to the satisfac­ tion of the competent authorities, on the basis of prudent valuation standards laid down by law, regulation or admin­ istrative provisions. Valuation shall be carried out at least once every three years for residential property.

The requirements in Annex VIII, Part 2, point 8, and in Annex VIII Part 3, points 62 to 65 shall apply for the pur­ pose of this paragraph.

“Residential property” shall mean a residence to be occupied or let by the owner.

2.

For the purpose of this Section, a credit institution may

reduce the exposure value by up to 50 % of the value of the commercial property concerned only if the competent authorities concerned in the Member State where the com­ mercial property is situated allow the following exposures to receive a 50 % risk weight in accordance with Articles 78

to 83:

  • (a)

    exposures secured by mortgages on offices or other commercial premises, or by shares in Finnish housing companies, operating in accordance with the Finnish Housing Company Act of 1991 or subsequent equiva­ lent legislation, in respect of offices or other commercial premises; or

  • (b)

    exposures related to property leasing transactions con­ cerning offices or other commercial premises.

The value of the property shall be calculated, to the satisfac­ tion of the competent authorities, on the basis of prudent valuation standards laid down by law, regulation or admin­ istrative provisions.

Commercial property shall be fully constructed, leased and produce appropriate rental income.’;

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