67% of CRE including SMEs and indirect loans?

Criteria
1

Hi there,

Can I please ask for a clarification on the scope of the CRE requirement?

  • You have a 67% by floor space requirement. Does this mean you only require direct lending for CRE (i.e. mortgages)? This would mean that any indirect lending (e.g. to REITs) would fall under the ‘67% of remaining portfolio requirement’.
  • Are loans to SMEs included in this 67% floor space requirement or can SMEs be excluded?

Many thanks,

Ana

2

Table 5.2 of the Near-Term Financial Sector SBT Guidance, which provides minimum coverage requirements, has been updated in the draft Version 2 with more granular specifications for each asset class. For example, a separate real estate asset class has been explicitly added to make requirements there clearer. Commercial real estate asset loans would refer to all loans for the purchase, refinance, construction, or rehabilitation of real estate assets (i.e., residential and service buildings) that are not provided to consumers (which would be considered consumer loans - residential mortgages) while general purpose loans to REITs or real estate companies can be included under “all other sectors” of corporate loans. If there is no differentiation in short vs. long-term or SME vs. corporate mentioned for an asset class, then both would be in scope.

The proposed changes are up for public consultation so we welcome your feedback/questions on this document, and two other new documents, through the survey by Aug 14.