Norwegian bank's SME discount likely to be financed by mortgage customers
In 2019, Norway is set to implement EU capital requirement regulations not already incorporated in domestic legislation. These regulations, the capital requirements regulation (CRR) and the capital requirements directive (CRD IV), include capital discounts for banks' SME customers. In our view, given the Norwegian financial supervisory authority's (FSA's) ambition to uphold banks' total core equity requirements through higher Pillar 2 requirements, reduced capital charges for SME customers are likely to be financed by higher capital charges for other customers. In the case of Norwegian