20 October 2023
The European Mortgage Federation-European Covered Bond Council (EMF-ECBC) is pleased to announce the publication today of a paper on operationalising the Basel III ‘property value’, drafted in cooperation with representatives of the real estate finance industry and the valuation profession, namely the Spanish Valuers’ Association (AEV), the Association of Italian Property Valuation Companies (ASSOVIB), the International Valuation Standards Council (IVSC), the Royal Institution of Chartered Surveyors (RICS), the European AVM Alliance (EAA) and CREFC Europe.
Today’s Paper is intended to offer guidance to the European Commission and national authorities in implementing and therefore operationalising the Basel III ‘property value’ currently being transposed into the Capital Requirements Regulation (CRR) as prescribed by the Basel Committee on Banking Supervision (BCBS) which, alongside other features, requires that properties are valued “in a prudently conservative manner”.
The valuation of immovable property is instrumental for the determination of the risk weights of residential and commercial real estate exposures and subsequently the calculation of banks’ capital requirements. The concept and definition of the ‘property value’ are therefore critical for both the real estate finance industry and the valuation profession. The key components outlined in the Paper will support the practical and proportionate operationalisation of this concept, in full alignment with the CRR and with the BCBS’ original recommendations.
Commenting on this development, Luca Bertalot, EMF-ECBC Secretary General, stated:
“The publication of today’s sectoral paper on the Property Value is a very important result. In the current complex and changing market and regulatory environment, not only does it provide robust and clear guidance to policymakers on implementing the concept, which has not been defined in the CRR, yet will significantly impact market practices, but it is also a very strong signal of the ability of the real estate finance industry and valuation profession to provide constructive market governance and work together to achieve consensus on issues of mutual relevance to the benefit of all.”
Tel: +32 2 285 40 35