Dutch cbank: banks must hold 3 bln euros extra capital for mortgages

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AMSTERDAM (Reuters) – The Dutch central bank said on Tuesday it would require banks to retain 3 billion euros ($3.31 billion) in additional capital to compensate for risks posed by mortgage portfolios.

In its fall report on financial stability, De Nederlandsche Bank said the measure would better prepare the banks to weather a downturn in house prices. It said it would increase the average risk weighting for mortgages to 14%-15% from the current 11%

In the report, the bank also warned that continuing low interest rates pose a challenge to stability, as they undermine banks’ profitability and hurt solvency at pension funds and insurance companies.

Reporting by Toby Sterling; Editing by Muralikumar Anantharaman

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