Stricter lending rules for Norwegian banks

Oslo

NORWAY'S banks will have to assume bigger lending losses on residential mortgages from next year, the finance ministry ruled on Sunday, in a move that could force banks to increase capital buffers even further.

From Jan 1, banks will have to use a Loss Given Default (LGD) rate of 20 per cent instead of the current 10 per cent in their calculations on mortgages, and maintain capital buffers accordingly, the ministry said.