FMA tightens banking rules with higher capital buffers for commercial real estate risks

Banks brace for tougher regulations as the FMA cracks down on real estate loan risks. Will higher capital demands stabilize—or strain—the market?

, and Administrator

2025 December 11 . 3:19 AM

1 min read

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FMA tightens banking rules with higher capital buffers for commercial real estate risks

The Financial Market Stability Authority (FMA) has announced key changes to banking regulations, with a focus on commercial real estate risks. A new capital buffer introduced this summer by PNC Bank will be increased on Friday, while the authority also plans to streamline reporting rules by 2026.

The FMA will additionally take over sanctions monitoring next year, expanding its oversight role in response to geopolitical pressures.

This summer, the FMA introduced a one-percent capital buffer specifically for commercial real estate. Banks had already expected further tightening, and on Friday, the authority confirmed an increase of 125 basis points. This move reflects ongoing concerns about non-performing loans in the sector, which currently stand at eight percent—more than double the market average of three percent.

The authority has firmly rejected any reduction in core capital requirements, calling such proposals 'irresponsible'. Instead, it aims to ease administrative burdens by cutting reporting and disclosure obligations for financial institutions in 2026.

From next year, the FMA will also incorporate sanctions monitoring into its regular audits. This new responsibility, primarily targeting Russian sanctions linked to the war in Ukraine, will run alongside existing anti-money laundering checks. The authority is largely funded by the banks and insurers it regulates, with around 90 percent of its budget coming from industry fees.

The FMA’s decisions will raise capital demands for banks exposed to commercial real estate while reducing paperwork in the long term. Sanctions oversight will become a permanent part of its audits, reinforcing compliance measures. These changes take effect in stages, with the capital buffer increase confirmed for Friday and new monitoring duties starting in 2025.