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  4. BIS consultation with amended proposals on Revisions to the Standardised Approach for credit risk

BIS consultation with amended proposals on Revisions to the Standardised Approach for credit risk

Last updated: 11 Mar 2016

Consulting body:
Basel Committee on Banking Standards
Period of consultation:
Runs from 1 December 2015 to 11 March 2016
CML action:
Response submitted

In response to the submissions to the first consultation on Revisions to the Standardised Approach for credit risk, the BIS has published a further consultation with amended proposals. This consultation suggests an alternative taxonomy to the risk weights applied to various asset classes including prime residential, BTL and lending to Social Housing Associations.

We have responded to the further BIS Consultation on revisions to the Standardised Approach for credit risk. 

While we welcome the changes in this document, we continue to have concerns with the methodology of calculating and the calibration of risk weights for both prime residential and buy-to-let mortgage markets.   

As currently proposed, the changes will required lenders to hold significantly more capital against these asset classes which we do not think justified given the evidenced risk metrics of these markets. 

We welcome the revised approach to Social Housing within the document and make some suggestions to ensure that the social housing markets of the UK including the devolved nations is captured in the revised methodology.