Notification by Bank of Slovenia on the debt-service-to-income (DSTI) ratio limit

Template for notifying national macroprudential measures not covered by CRR/CRD

Please send this template to

• [e-mail] notifying the ESRB;
• [e-mail] notifying the ECB.

Emailing this template to the above-mentioned addresses constitutes an official notification, no further official letter is required. In order to facilitate the work of the notified authorities, please send the notification template in a format that allows electronically copying the information.

	1. Notifying national authority and scope of the notification
1.1		Name of the notifying	Bank of Slovenia
		authority.
1.2		Name of the	Ammendment to the macroprudential restrictions on household lending
		macroprudential measure
		that is notified.
	2. Description of the measure
2.1		Description of the	On November 1st 2019, the DSTI limit became legally binding for all new
		measure.	loans to households. DSTI is calculated as the ratio between the cost of
			total debt servicing in the next 12 months and the borrower's income in
			the last 12 months. For further information please see attached annex.
			Due to COVID-19 some individuals might have experienced temporary
			declines in their income, which do not necessary, reflect a change in their
			long-term credit worthiness. Therefore, the macroprudential restrictions
			on household lending were amended to provide some temporary
			flexibility when calculating income.
			If the borrower's income was temporarily affected by COVID-19 and has
			since normalized (i.e. the bank has information for at least one month of
			normalized income), the banks can exclude the months with decreased
			earning. In this case, the income is annualized using the information for
			remaining months.

1

Date of template version: 2016-03-01

1. Legal basis and process of implementation of the measure.
2. Coverage

2.4 Any other relevant information.

The Bank of Slovenia issued the macroprudential restrictions pursuant to Articles 4, 17 and 19 of the Macroprudential Supervision of the Financial System Act (Official Gazette of the Republic of Slovenia, No. 100/13).

Same as the parent measure.

/

3.	Timing
3.1		Timing of the decision	The Governing Board of the Bank of Slovenia amended the
			macroprudential restrictions on household lending at its 643th meeting
			held on 12 May 2020.
3.2		Timing of the publication	The amendment to the macroprudential restrictions on household lending
			was published in the Official Gazette of the Republic of Slovenia, No.
			72/20 that was issued on the 22 May 2020. The information about the
			amendment was published on Bank of Slovenia's website on the same
			day.
3.3		Disclosure	Banks were informed about the change in the measure on the same day
			that the measure was published in the
			Official Gazette of the Republic of Slovenia.
3.4		Timing of the application	The changes entered into force on the 1st of June 2020.
3.5		End date (if applicable)	/

4. Reason for the activation of the measure

2

4.1 Description of the	Same as the parent measure.
macroprudential risk to be
addressed.

4.2 Description of the	/
indicators on the basis of
which the measure is
activated.

4.3 Effects of the measure.

The purpose of the amendment is to mitigate the effects of temporary income declines on the credit worthiness of the population.

5. Cross-border and cross-sector impact of the measure

1. Assessment of cross- border effects and the likely impact on the internal market (Article 133(11)(d) of the CRD IV and Recommendation ESRB/2015/2)
2. Assessment of leakages and regulatory arbitrage within the notifying Member State

Cross-border effects are not expected.

The amendment does not change the potential for regulatory arbitrage and leakages. The Bank of Slovenia will monitor potential circumventions of macroprudential measures.

3

5.3	Request for reciprocation	No.

6.	Miscellaneous
6.1		Contact person(s) at	Mark Požlep, tel: [phone] e-mail:[e-mail]
		notifying authority.	Miha Pučnik, tel: + 386 1 47 19 588, e-mail:[e-mail].
6.2		Any other relevant	Please visit the following webpage for more information on the
		information.	macroprudential restrictions and its full text:
			https://www.bsi.si/en/financial-stability/macroprudential-
			supervision/macroprudential-instruments/macroprudential-restrictions-on-
			household-lending.
			Annex:
			Annex_SI_CB_Notification_document_for_macroprudential_measure_LTV_DSTI_2019.doc

4