The Danish Financial Supervisory Authority (Finanstilsynet) published loss levels for exposures secured by mortgages on immovable property and its assessment of whether a well-developed and well-established property market exists in Greenland and the Faroe Islands, as required under the Capital Requirements Regulation (CRR). With losses in 2024 below the specified limits, credit institutions can apply the lower CRR risk weights to loans secured on both residential and commercial property in Denmark, and may also do so in Greenland and the Faroe Islands where the market condition is met. Under the preferential treatment referenced by Finanstilsynet, up to 55% of a residential property’s value can be risk-weighted at 20%, and up to 55% of a commercial property’s value can be risk-weighted at 60%. Institutions must still assess in each case whether it is prudent to use the lower risk weights.
Danish Finanstilsynet 2025-11-10
Danish Financial Supervisory Authority publishes 2024 loss levels enabling lower CRR risk weights for real estate secured exposures
The Danish Financial Supervisory Authority reported that 2024 loss levels for mortgage-secured exposures were below limits, allowing credit institutions to apply lower Capital Requirements Regulation risk weights in Denmark, Greenland, and the Faroe Islands. Up to 55% of a residential property's value can be risk-weighted at 20%, and up to 55% of a commercial property's value at 60%, provided market conditions are met. Institutions must individually assess the prudence of using these lower risk weights.