Difference between "mortgage portfolio" and "corporate loan: commercial real estate"

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Hi there,

According to the FI SBTI target submission form (p.25), the asset class specific target language template includes asset classes like 1) real estate, 2) mortgages, 3) electricity generation project finance, 4) corporate instruments (equity, bonds, loans).

My questions are:

  1. Does the asset class “real estate” mean commercial mortgage loan?
  2. Does the asset class “mortgages” mean residential mortgage loan?
  3. If so, the applicable methods for setting targets regarding commercial mortage loans include SDA? (There is no “commercial mortgage loan” as an asset class in Table 5.2 in the FI guidance, but only “corporate loan: commercial real estate” and “listed equity and bonds: REITs, listed real estate companies, and real estate mutual funds” that are relevant to “real estate”.)
  4. Why is the unit of minimum coverage for “corporate loan: commercial real estate” m2? Isn’t the real estate corporates should also be considered as corporates? Shouldn’t the real estate corporate itself and the buildings it owns be distinguished?

Thank you in advance!
Seajin

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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.

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.