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RICS EU Policy & Public Affairs

RICS EU Policy & Public Affairs. Sander Scheurwater, Head of EU Policy & Public Affairs. January 2012. Content. Introduction of RICS EU Policy & Public Affairs Residential mortgage credit Basel III & CRD IV Member-staff contact and communication. Month 2008. Content.

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RICS EU Policy & Public Affairs

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  1. RICS EU Policy & Public Affairs Sander Scheurwater, Head of EU Policy & Public Affairs January 2012

  2. Content • Introduction of RICS EU Policy & Public Affairs • Residential mortgage credit • Basel III & CRD IV • Member-staff contact and communication Month 2008

  3. Content • Introduction of RICS EU Policy & Public Affairs • Residential mortgage credit • Basel III & CRD IV • Member-staff contact and communication Month 2008

  4. The EU - growth

  5. EU Policy & Public Affairs • Gaining recognition of RICS standards

  6. EU Policy & Public Affairs • Gaining recognition of RICS standards • Update members of upcoming relevant legislation

  7. EU Policy & Public Affairs • Gaining recognition of RICS standards • Update members of upcoming relevant legislation • Liaise with EU institutions

  8. The EU - growth • Treaties • 80% of national legislation is derived from EU legislation • Direktiv (Directive) • Förordning (Regulation) • 3 key institutions • Europeiska Kommissionen • Europeiska Unionens Råd • Europaparlamentet

  9. The EU - Commission • Political & administrative • Initiation and formulation of policies • Monitoring of policy implementation • Guardian of the treaty • European interests

  10. The EU - Council • Council of Europe and the European Council • Voting: • Unanimity or Qualified Majority Voting (QMV) • Germany, UK, … - 29 votes • Sweden, Austria, … - 10 votes • Malta – 3 votes • Total: 345 • QMV = 255 and 18 Member States • National interests

  11. The EU - Parliament • 734 representatives • Political parties: • EPP (Moderata Samlingspartiet,Kristdemokraterna) • S&D (Arbetarepartiet-Socialdemokraterna) • Liberals (Centerpartiet, Folkpartiet liberalerna) • Greens (Miljöpartiet de gröna, Piratpartiet) • United Left (Vänsterpartiet) • Greater power, but still the great unknown

  12. The EU – ordinary legislative procedure • European Commission proposal • Parliament and Council approve, reject or amend • Maximum three readings • Increased dialogue between institutions • RICS influence at early stages

  13. EU Policy & Public Affairs • Gaining recognition of RICS standards • Update members of upcoming relevant legislation • Liaise with EU institutions • Liaise with relevant stakeholders

  14. EU Policy & Public Affairs • Gaining recognition of RICS standards • Global support • Update members of upcoming relevant legislation • Liaise with EU institutions • Liaise with relevant stakeholders

  15. The team Sander Scheurwater; Head of EU Policy & Public Affairs • Valuation & financial services; Housing Zsolt Toth; EU Policy & Public Affairs Officer • Construction, Energy & Climate, Internal Market Thomas Jézéquel; EU Policy & Public Affairs Officer • Urban development, CEN standards, Land, Disaster Management Natasha Lanskaya; Assistant • Admin support, events, multimedia

  16. Content • Introduction of RICS EU Policy & Public Affairs • Residential mortgage credit • Basel III & CRD IV • Member-staff contact and communication Month 2008

  17. Residential mortgage credit & valuation • 31 March 2011: pre-contractual information for residential mortgage credit agreements • European Parliament: • Committee discussion: significant extension of scope • Including valuation • RICS: • Mandatory valuation standards & qualifications • International valuation standards • Valuation & foreclosure • Outcome?

  18. Content • Introduction of RICS EU Policy & Public Affairs • Residential mortgage credit • Basel III & CRD IV • Member-staff contact and communication Month 2008

  19. Basel III - background • Basel Committee on Banking Supervision (BCBS) • Aim: Encourage convergence toward common approaches and standards for banks • Supervisory standards and guidelines • Recommends best practice • No binding regulation Month 2008

  20. Basel I • “1988 Basel Accord” • Minimal capital requirements for banks • Risk weights • 8% of capital for banks with international presence Month 2008

  21. Basel II • Published in 2004 • Consistency & level-playing field • Risk-based • Three pillar concept • Minimum capital requirements • Supervisory review • Market discipline

  22. Basel II was just being implemented… Month 2008

  23. Basel III • December 2010 • Basel II+ • Same three pillars • Massive readjustment • Capital & Liquidity Requirements • Risks-weights evaluated

  24. Basel III – strengthening of capital • Basel II+ • Same three pillars • Massive readjustment • Strenghtening of the quality and level of capital • Minimum level of core bank capital will increase • Capital conservation buffer • Countercyclical buffer • Leverage ratio (3%)

  25. Basel III – liquidity requirements • Liquidity Coverage Ratio (LCR) • Short-term resilience • To be met continuously • Stock of high-quality liquid assets / Total net cash outflows over the next 30 calendar days ≥ 100% • Net Stable Funding Ratio (NSFR) • Long-term resilience • Available amount of stable funding / Required amount of stable funding > 100% • Subject to test period

  26. Basel III - timetable • Capital Conservation buffer (2%): 2016 – 2019 • Countercyclical buffer: Discretion of national authorities • Leverage ratio: 2018 • LCR: 1 January 2015 • NSFR: 1 January 2018

  27. EU implementation – Capital Requirements Directive (CRD) • CRD IV = Basel III + • All banks • Sanctions • Enhanced supervision • Less reliance on external ratings? • What about property and valuation? • Banks will have higher costs • Banks will have a lower risk premium

  28. CRD - property • Eligible collateral. Distinction between residential and commercial property. • Risk weight: • 35% for residential property • 50% for commercial • Only if certain conditions are met, otherwise 100% • Member States may be allowed to set higher risk weights • New • Reporting obligations • Speculation and default

  29. CRD - valuation • Independent qualified valuer • Minimum once a year for commercial • Minimum once every three years for residential • Definitions include: • Market value • Mortgage lending value • Marking to market • Marking to model

  30. CRD - conclusion • Implementation dates same as Basel III • Diverging views between EU institutions & countries • More stringent requirements for banks • Impact on mortgage lending sector expected • Impact on wider property sector?

  31. Content • Introduction of RICS EU Policy & Public Affairs • Residential mortgage credit • Basel III & CRD IV • Member-staff contact and communication Month 2008

  32. Communication with members • Updates & policy development • rics.org/eu • EU Connect • Twitter & Facebook • Monitoring Documents • Country Managers • Direct member contact • National position/statement

  33. Thank you

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