Information on Loss Rates under the CRR and Related Exemption Provisions

13 January 2026
Ref.: 2601231

Circular no.: 2/2026
To financial undertakings and the Association of Companies in Financial Services

Subject: Information on loss rates under the CRR and related exemption provisions

At the end of 2025, Regulation (EU) 2024/1623 (CRR III), which amends Regulation (EU) No. 575/2013 (CRR), was implemented in this country by Act No. 102/2025, amending the Act on Financial Undertakings, No. 161/2002.

The Regulation changed the risk weights for exposures secured by mortgages on residential and commercial property, cf. Articles 124-126 CRR. The following exemption provisions also entered into force.

According to the third subparagraph of Article 125(2) CRR, a financial undertaking is permitted to apply the risk weight under the first paragraph of the same Article to exposures secured by mortgages on residential property, whether or not the property is income-producing, if the competent authority in the relevant country has published information on loss rates in accordance with Article 430a(3) CRR for such exposures and according to that information they do not exceed any of the limits for losses across such exposures. The same applies, mutatis mutandis, to exposures secured by mortgages on commercial property, cf. the third subparagraph of Article 126(2) CRR.

The Central Bank of Iceland has now published information on loss rates in accordance with Article 430a(3) CRR, based on data at the end of 2024, and they do not exceed the relevant limits, cf. further here.

From the foregoing it follows that financial undertakings in this country can use the exemption provisions under the third subparagraph of Article 125(2) and the third subparagraph of Article 126(2) CRR when calculating the risk base.

Yours faithfully,
CENTRAL BANK OF ICELAND

Gísli Óttarsson
Jónas Þór Brynjarsson
Managing Director
Head of Department
Prudential Supervision
Prudential Supervision