by Commission Delegated Regulation (EU) 2024/2795 of 24 July 2024 and/or Regulation (EU) 2024/1623 of 31 May 2024
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Section 1 Own funds requirements
Article 465 OwnTransitional fundsarrangements requirementsfor the output floor
1. By way of derogation from pointsArticle 92(a3), first subparagraph, and without prejudice to the derogation set out in Article 92(3), second subparagraph, institutions may apply the following factor x where calculating TREA:
(a) 50 % during the period from 1 January 2025 to 31 December 2025;
(b) of55 Article% 92during the period from 1 January 2026 to 31 December 2026;
(c) 60 % during the period from 1 January 2027 to 31 December 2027;
(d) 65 % during the followingperiod ownfrom funds1 requirementsJanuary shall2028 applyto 31 December 2028;
(e) 70 % during the period from 1 January 20142029 to 31 December 20142029.
2. By way of derogation from Article 92(3), first subparagraph, and without prejudice to the derogation set out in Article 92(3), second subparagraph, institutions may, until 31 December 2029, apply the following formula where calculating TREA:
[formula]
For the purposes of that calculation, institutions shall take into account the applicable factor x referred to in paragraph 1.
3. By way of derogation from Article 92(5), point (a)(ii), and without prejudice to the derogation set out in Article 92(3), second subparagraph, institutions may, until 31 December 2032, assign a Commonrisk Equityweight Tierof 165 capital% ratioto exposures to corporates for which no credit assessment by a nominated ECAI is available and provided that those institutions’ estimates of the PD of those obligors, calculated in accordance with Part Three, Title II, Chapter 3, are no greater than 0,5 %.
EBA and ESMA, in cooperation with EIOPA, shall monitor the use of the transitional treatment laid down in the first subparagraph and assess, in particular:
(a) the availability of credit assessments by nominated ECAIs for corporates and the extent to which that affects institutions’ lending towards corporates;
(b) the development of credit rating agencies, barriers to entry to the market for new credit rating agencies, the rate of uptake by corporates choosing to be rated by one or more of those agencies, and impediments to the availability of credit assessments for corporates by ECAIs;
(c) possible measures to address the impediments, taking into account differences across economic sectors and geographical areas and the development of private or publicly led solutions such as credit scoring, private ratings mandated by institutions, as well as central bank ratings;
(d) the appropriateness of the risk-weighted exposure amounts of unrated corporate exposures and their implications for financial stability;
(e) the approaches of third countries concerning the application of the output floor to corporate exposures and long-term level playing field considerations that fallscould withinarise as a rangeresult;
(f) compliance with related internationally agreed standards developed by the BCBS.
EBA and ESMA, in cooperation with EIOPA, shall submit a report with their findings to the Commission by 10 July 2029.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2031.
4. By way of derogation from Article 92(5), point (a)(iv), and without prejudice to the derogation set out in Article 92(3), second subparagraph, institutions shall, until 31 December 2029, replace alpha by 1 in the calculation of the exposure value for the contracts listed in Annex II in accordance with the approaches set out in Part Three, Title II, Chapter 6, Section 3 where the same exposure values are calculated in accordance with the approach set out in Part Three, Title II, Chapter 6, Section 6 for the purposes of the total un-floored risk exposure amount.
5. By way of derogation from Article 92(5), point (a)(ii), and without prejudice to the derogation set out in Article 92(3), second subparagraph, and provided that all conditions set out in paragraph 8 of this Article are met, Member States may allow institutions to assign:
(a) until 31 December 2032, a risk weight of 10 % to 4the part of the exposures secured by mortgages on residential property up to 55 % of the property value determined in accordance with Article 125(1), first subparagraph; and
(b) until 31 December 2029, a risk weight of 45 % to any remaining part of the exposures secured by mortgages on residential property up to 80 % of the property value determined in accordance with Article 125(1), first subparagraph, provided that the adjustment to own funds requirements for credit risk referred to in Article 501 is not applied.
6. For the purposes of paragraph 5, point (a), where an institution holds a junior lien and there are more senior liens not held by that institution, to determine the part of the institution’s exposure that is eligible for the 10 % risk weight, the amount of 55 % of the property value shall be reduced by the amount of the more senior liens not held by the institution.
Where liens not held by the institution rank pari passu with the lien held by the institution, to determine the part of the institution’s exposure that is eligible for the 10 % risk weight, the amount of 55 % of the property value, reduced by the amount of any more senior liens not held by the institution, shall be reduced by the product of:
(a) 55 % of the property value, reduced by the amount of more senior liens, if any, both held by the institution and held by other institutions; and
(b) the amount of liens not held by the institution that rank pari passu with the lien held by the institution divided by the sum of all pari passu liens.
7. For the purposes of paragraph 5, point (b), where an institution holds a Tierjunior lien and there are more senior liens not held by that institution, to determine the part of the institution’s exposure that is eligible for the 45 % risk weight, the amount of 80 % of the property value shall be reduced by the amount of the more senior liens not held by the institution.
Where liens not held by the institution rank pari passu with the lien held by the institution, to determine the part of the institution’s exposure that is eligible for the 45 % risk weight, the amount of 80 % of the property value, reduced by the amount of any more senior liens not held by the institution, shall be reduced by the product of:
(a) 80 % of the property value, reduced by the amount of more senior liens, if any, both held by the institution and held by other institutions; and
(b) the amount of liens not held by the institution that rank pari passu with the lien held by the institution divided by the sum of all pari passu liens.
8. For the purposes of paragraph 5 of this Article, all of the following conditions shall be met:
(a) the exposures qualify for the treatment pursuant to Article 125(1);
(b) capitalthe ratioqualifying exposures are risk weighted in accordance with Part Three, Title II, Chapter 3;
(c) the residential property securing the qualifying exposures is located in the Member State that has exercised the discretion;
(d) over the last eight years the institution’s losses in any given year, as reported by the institution pursuant to Article 430a(1), points (a) and (c), or pursuant to Article 101(1), points (a) and (c), in the version of those points applicable on 27 June 2021, on the part of the exposures secured by mortgages on residential property up to the lower of the pledged amount and 55 % of the property value, unless otherwise determined under Article 124(9), do not exceed on average 0,25 % of the sum of the exposure values of all outstanding exposures secured by mortgages on residential property;
(e) for the qualifying exposures the institution has the following enforceable rights in the event of the default or non-payment of the obligor:
(i) a levelright on the residential property securing the exposure or the right to take a mortgage on the residential property in accordance with Article 108(5), point (g);
(ii) a right on other assets and income of the obligor either contractually or by applicable national law;
(f) the competent authority has verified that fallsthe withinconditions set out in points (a) rangeto (e) are met.
9. Where the discretion referred to in paragraph 5 has been exercised and provided that all conditions set out in paragraph 8 are met, institutions may assign the following risk weights to any remaining part of the exposures secured by mortgages on residential property referred to in paragraph 5, point (b), until 31 December 2032:
(a) 52,5 % during the period from 1 January 2030 to 631 December 2030;
(b) 60 % during the period from 1 January 2031 to 31 December 2031;
(c) 67,5 % during the period from 1 January 2032 to 31 December 2032.
210. Where Member States exercise the discretion referred to in paragraph 5, they shall notify EBA and substantiate their decision. Competent authorities shall determinenotify the details of all verifications referred to in paragraph 8, point (f), to EBA.
11. EBA shall monitor the use of the transitional treatment laid down in paragraph 5 and publishshall submit a report with its findings on the levelsappropriateness of the Commonassociated Equityrisk Tierweights 1to the Commission by 31 December 2028.
On the basis of that report and Tiertaking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2031.
12. Any extension of any of the transitional arrangements referred to in paragraphs 3, 5 and 9 of this Article, and in Articles 495b(1), capital495c(1) ratiosand 495d(1), shall be limited to four years, and shall be substantiated with an evaluation equivalent to those referred to in those Articles.
13. By way of derogation from Article 92(5), point (a)(iii) or (b)(ii), and without prejudice to the rangesderogation specifiedset out in paragraphArticle 192(3), second subparagraph, for exposures that are risk weighted using the SEC-IRBA or the Internal Assessment Approach in accordance with Article 92(4), where the part of the standardised total risk-weighted exposure amount for credit risk, dilution risk, counterparty credit risk or for market risk arising from the trading book business is calculated using the SEC-SA in accordance with Article 261 or 262, institutions shall, meetuntil or31 exceedDecember 2032, apply the following factor p:
(a) p = 0,25 for a position in a securitisation to which Article 262 applies;
(b) p = 0,5 for a position in a securitisation to which Article 261 applies.
Article 466 First time application of International Financial Reporting Standards By way of derogation from Article 24(2), competent authorities shall grant institutions which are required to effect the valuation of assets and off-balance sheet items and the determination of own funds in accordance with the international accounting standards as applicable under Regulation (EC) No 1606/2002 for the first time a lead time of 24 months for the implementation of the necessary internal processes and technical requirements.
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(h) asset items constituting claims on central governments in the form of statutory liquidity requirements held in government securities which are denominated and funded in their national currencies provided that, at the discretion of the competent authority, the credit assessment of those central governments assigned by a nominated ECAI is investment grade;
(i) 50 % of medium/lowbucket risk4 off-balance -sheet documentary credits and of medium/lowbucket risk3 off-balance -sheet undrawn credit facilities referred to in Annex I with an original maturity of up to and including one year and subject to the competent authorities'’ agreement, 80 % of guarantees other than loan guarantees which have a legal or regulatory basis and are given for their members by mutual guarantee schemes possessing the status of credit institutions;
(j) legally required guarantees used when a mortgage loan financed by issuing mortgage bonds is paid to the mortgage borrower before the final registration of the mortgage in the land register, provided that the guarantee is not used as reducing the risk in calculating the risk- weighted exposure amounts;
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(b) the securitisation met, on 8 April 2021, the conditions laid down in Article 270 as applicable at that date.
Article 494d Reversion to less sophisticated approaches By way of derogation from Article 149, an institution may from 9 July 2024 until 10 July 2027, revert to less sophisticated approaches for one or more of the exposure classes referred to in Article 147(2), where all of the following conditions are met:
(a) the institution already existed on 8 July 2024 and was authorised by its competent authority to treat those exposure classes under the IRB Approach;
(b) the institution requests a reversion to a less sophisticated approach only once during that three-year period;
(c) the request to revert to a less sophisticated approach is not made with a view to engaging in regulatory arbitrage;
(d) the institution has formally notified the competent authority that it wishes to revert to a less sophisticated approach for those exposure classes at least six months before it effectively does revert to that approach;
(e) the competent authority has not objected to the institution’s request to such reversion within three months of the receipt of the notification referred to in point (d).
Article 495 Treatment of equity exposures under the IRB Approach
1. UntilBy 31way Decemberof 2017derogation from Article 107(1), institutions that have been granted permission to apply the competentIRB authoritiesApproach mayto calculate the risk-weighted exposure amount for equity exposures shall, byuntil way31 ofDecember derogation2029 fromand Chapterwithout 3prejudice ofto PartArticle Three495a(3), exemptcalculate fromthe risk-weighted exposure amount for each equity exposure for which they have been granted permission to apply the IRB treatmentApproach certainas categoriesthe higher of equitythe exposuresfollowing:
(a) heldthe byrisk-weighted institutionsexposure amount calculated in accordance with Article 495a(1) and EU(2);
(b) subsidiariesthe risk-weighted exposure amount calculated under this Regulation in the version applicable on 8 July 2024.
2. Instead of institutionsapplying the treatment laid down in paragraph 1, institutions that Memberhave Statebeen asgranted permission to apply the IRB Approach to calculate the risk-weighted exposure amount for equity exposures may apply the treatment set out in Article 133 to all their equity exposures at any time until 31 December 20072029.
Where Theinstitutions competentapply authoritythe first subparagraph of this paragraph, Article 495a(1) and (2) shall publishnot apply.
For the categoriespurposes of equitythis exposuresparagraph, whichthe benefitconditions fromto suchrevert treatmentto inthe accordanceuse withof less sophisticated approaches set out in Article 143149 ofshall Directivenot 2013/36/EUapply.
The3. exemptedInstitutions positionapplying the treatment laid down in paragraph 1 of this Article shall becalculate measuredthe expected loss amount in accordance with Article 158(7), (8) or (9), as applicable, in the numberversion of sharesthose asparagraphs atapplicable 31on December8 2007July 2024 and anyapply additionalArticle share36(1), arisingpoint directly(d), and Article 62, point (d), as aapplicable, resultin ofthe owningversion of those holdings,points providedapplicable thaton they8 doJuly not2024 increasewhere the proportionalrisk-weighted shareexposure amount calculated pursuant to paragraph 1, point (b), of ownershipthis inArticle is higher than the risk-weighted exposure amount calculated pursuant to paragraph 1, point (a), portfolioof companythis Article.
If4. anWhere acquisitioninstitutions increasesrequest permission to apply the proportionalIRB shareApproach to calculate the risk-weighted exposure amount for equity exposures, competent authorities shall not grant such permission after 31 December 2024.
Article 495a Transitional arrangements for equity exposures
1. By way of ownershipderogation from the treatment laid down in aArticle specific133(3), holdingequity exposures shall be assigned the parthigher of the holdingrisk whichweight constitutesapplicable theon excess8 shallJuly not2024, becapped subjectat to250 %, and the exemption.following Norrisk-weights:
(a) shall100 % during the exemptionperiod applyfrom 1 January 2025 to holdings31 thatDecember were2025;
(b) originally130 subject% toduring the exemption,period butfrom have1 beenJanuary sold2026 andto then31 boughtDecember back.2026;
Equity(c) exposures160 subject% toduring thisthe provisionperiod shallfrom be1 subjectJanuary 2027 to 31 December 2027;
(d) 190 % during the capitalperiod requirementsfrom calculated1 inJanuary accordance2028 withto 31 December 2028;
(e) 220 % during the Standardisedperiod Approachfrom under1 PartJanuary Three,2029 Titleto II,31 ChapterDecember 2029.
2. andBy way of derogation from the requirementstreatment setlaid outdown in TitleArticle IV133(4), equity exposures shall be assigned the higher of Partthe Three,risk asweight applicable.
Competent authoritieson shall8 notifyJuly 2024 and the Commissionfollowing andrisk EBAweights:
(a) of100 % during the implementationperiod offrom this1 paragraph.January 2025 to 31 December 2025;
3.(b) EBA160 shall% developduring draftthe regulatoryperiod technicalfrom standards1 January 2026 to specify31 December 2026;
(c) 220 % during the conditionsperiod accordingfrom 1 January 2027 to which31 competentDecember authorities2027;
(d) shall280 afford% during the exemptionperiod referredfrom 1 January 2028 to in31 paragraphDecember 2028;
(e) 340 % during the period from 1 January 2029 to 31 December 2029.
EBA3. shallBy submitway thoseof draftderogation regulatoryfrom technicalArticle standards133, institutions may continue to assign the Commissionsame byrisk 30weight Junethat 2014.
Powerwas isapplicable delegatedon 8 July 2024 to equity exposures, including the Commissionpart toof adoptthe exposures not deducted from the regulatoryown technicalfunds standardsin referredaccordance towith Article 471 in the firstversion subparagraphof that Article applicable on 27 October 2021, to entities in accordancewhich they have been a shareholder on 27 October 2021 for six consecutive years and over which they, or together with Articlesthe 10network the institutions belong to, 14exercise significant influence or control within the meaning of Directive 2013/34/EU, or of the accounting standards to which an institution is subject under Regulation (EUEC) No 10931606/20102002, or as a result of a similar relationship between any natural or legal person or network of institutions and an undertaking, or where an institution has the capacity to appoint at least one member of the management body of the entity.
Article 495b Transitional arrangements for specialised lending exposures
1. By way of derogation from Article 161(4), the LGD input floors applicable to specialised lending exposures treated under the IRB Approach where own estimates of LGD are used, shall be the applicable LGD input floors provided for in Article 161(4), multiplied by the following factors:
(a) 50 % during the period from 1 January 2025 to 31 December 2027;
(b) 80 % during the period from 1 January 2028 to 31 December 2028;
(c) 100 % during the period from 1 January 2029 to 31 December 2029.
2. EBA shall prepare a report on the appropriate calibration of risk parameters, including the haircut parameter, applicable to specialised lending exposures under the IRB Approach, and in particular on own estimates of LGD and LGD input floors for each specific category of specialised lending exposures as referred to in Article 147(8). EBA shall in particular include in its report data on average numbers of defaults and realised losses observed in the Union for different samples of institutions with different business and risk profiles. EBA shall recommend specific calibrations of risk parameters, including the haircut parameter, that would reflect the specific and different risk profile for each specific category of specialised lending exposures.
EBA shall submit that report to the European Parliament to the Council and to the Commission by 10 July 2026.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2027.
3. By way of derogation from Article 122a(3), point (a), specialised lending exposures as referred to in that point for which a directly applicable credit assessment by a nominated ECAI is not available may, until 31 December 2032, be assigned a risk weight of 80 %, where the adjustment to own funds requirements for credit risk referred to in Article 501a is not applied and the exposure is deemed to be of high quality when taking into account all of the following criteria:
(a) the obligor can meet its financial obligations even under severely stressed conditions due to the presence of all of the following features:
(i) adequate exposure-to-value of the exposure;
(ii) conservative repayment profile of the exposure;
(iii) commensurate remaining lifetime of the assets upon full pay-out of the exposure or alternatively recourse to a protection provider with high creditworthiness;
(iv) low refinancing risk of the exposure by the obligor or that risk is adequately mitigated by a commensurate residual asset value or recourse to a protection provider with high creditworthiness;
(v) the obligor has contractual restrictions over its activity and funding structure;
(vi) the obligor uses derivatives only for risk-mitigation purposes;
(vii) material operating risks are properly managed;
(b) the contractual arrangements on the assets provide lenders with a high degree of protection, including the following features:
(i) the lenders have a legally enforceable first-ranking right over the assets financed and, where applicable, over the income that they generate;
(ii) there are contractual restrictions on the ability of the obligor to make changes to the asset which would have a negative impact on its value;
(iii) where the asset is under construction, the lenders have a legally enforceable first-ranking right over the assets and the underlying construction contracts;
(c) the assets being financed meet all of the following standards to operate in a sound and effective manner:
(i) the technology and design of the asset are tested;
(ii) all necessary permits and authorisations for the operation of the assets have been obtained;
(iii) where the asset is under construction, the obligor has adequate safeguards on the agreed specifications, budget and completion date of the asset, including strong completion guarantees or the involvement of an experienced constructor and adequate contract provisions for liquidated damages.
4. EBA shall prepare a report, analysing the following:
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(c) the impact on own funds requirements of the treatment set out in Article 122a(3), point (a), for object finance exposures, without taking into account Article 465(1);
(d) the appropriateness of the definition of the sub-class of “‘high quality object finance”’ and to assign to that sub-class of exposures a different prudential treatment.
EBA shall submit that report to the European Parliament, to the Council and to the Commission by 31 December 2030.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2031.
Article 495c Transitional arrangements for leasing exposures as a credit risk mitigation technique
1. By way of derogation from Article 230, the applicable value of Hc corresponding to ‘other physical collateral’ for exposures referred to in Article 199(7) where the asset leased corresponds to the ‘other physical collateral’ type of funded credit protection, shall be the value of Hc for ‘other physical collateral’ provided for in Article 230(2), Table 1, multiplied by the following factors:
(a) 50 % during the period from 1 January 2025 to 31 December 2027;
(b) 80 % during the period from 1 January 2028 to 31 December 2028;
(c) 100 % during the period from 1 January 2029 to 31 December 2029.
2. EBA shall prepare a report on the appropriate calibrations of risk parameters associated with leasing exposures under the IRB Approach, and of risk weights under the Standardised Approach, and in particular on the LGDs and Hc provided for in Article 230. EBA shall in particular include in its report data on average numbers of defaults and realised losses observed in the Union for exposures associated with different types of properties leased and different types of institutions practicing leasing activities.
EBA shall submit that report to the European Parliament, to the Council and to the Commission by 10 July 2027.
On the basis of that report, and taking into account the internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2028.
Article 495d Transitional arrangements for unconditional cancellable commitments
1. By way of derogation from Article 111(2), institutions shall calculate the exposure value of an off-balance-sheet item in the form of unconditionally cancellable commitment by multiplying the percentage provided for in that Article by the following factors:
(a) 0 % during the period from 1 January 2025 to 31 December 2029;
(b) 25 % during the period from 1 January 2030 to 31 December 2030;
(c) 50 % during the period from 1 January 2031 to 31 December 2031;
(d) 75 % during the period from 1 January 2032 to 31 December 2032.
2. EBA shall prepare a report assessing whether the derogation referred to in paragraph 1, point (a), should be extended beyond 31 December 2032 and specifying, where necessary, the conditions under which that derogation should be maintained.
EBA shall submit that report to the European Parliament, to the Council and to the Commission by 31 December 2028.
On the basis of that report and taking due account of the related internationally agreed standards developed by the BCBS and the impact of those standards on financial stability, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2031.
Article 495e Transitional arrangements for ECAI credit assessments of institutions By way of derogation from Article 138, point (g), competent authorities may allow institutions to continue using an ECAI credit assessment in relation to an institution which incorporates assumptions of implicit government support until 31 December 2029.
Article 495f Transitional arrangements for property revaluation requirements By way of derogation from Article 229(1), points (a) to (d), for exposures secured by residential property or commercial immovable property granted before 1 January 2025, institutions may continue to value residential property or commercial immovable property at or less than the market value, or in those Member States that have provided for rigorous criteria for the assessment of the mortgage lending value in statutory or regulatory provisions, the mortgage lending value of that property, until a review of the property value is required in accordance with Article 208(3), or 31 December 2027, whichever is earlier.
Article 495g Transitional arrangements for certain public guarantees schemes By way of derogation from Articles 183(1) and 213(1), a guarantee that can be cancelled in the event of fraud by the obligor or the extent of credit protection of which can be diminished in such event, shall be considered to meet the requirements referred to in Article 183(1), point (d), and in Article 213(1), point (c), where the guarantee was provided by an entity referred to in Article 214(2), point (a), no later than 31 December 2024.
Article 495h Transitional arrangements for the use of the alternative internal model approach for market risk By way of derogation from Article 325az(2), point (d), institutions may use, until 1 January 2026, the alternative internal model approach to calculate their own funds requirements for market risk for trading desks that do not meet the requirements laid down in Article 325bg.
Article 497 Own funds requirements for exposures to CCPs
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An institution that excludes exposures to its central bank from its total exposure measure in accordance with paragraph 1 shall also disclose the leverage ratio it would have if it did not exclude those exposures.
Article 500c Exclusion of overshootings from the calculation of the back-testing addend in view of the COVID-19 pandemic By way of derogation from Article 366(3)325bf, competent authorities may, in exceptional circumstances and in individual cases, permit institutions to exclude the overshootings evidenced by the institution’s back-testing on hypothetical or actual changes from the calculation of the addend set out in Article 366(3)325bf, provided that those overshootings do not result from deficiencies in the internal model and provided that they occurred between 1 January 2020 and 31 December 2021.
Article 500d Temporary calculation of the exposure value of regular-way purchases and sales awaiting settlement in view of the COVID-19 pandemic
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2. For the purposes of this Article:
(a) the exposure to an SME shall be included either in the retail or in the corporates or secured by mortgages on immovable property exposure classes but excluding ADC exposures;
(b) an SME isshall definedhave in accordance with Commission Recommendation 2003/361/EC (); among the criteriameaning listedlaid down in Article 25, ofpoint the Annex to that Recommendation only the annual turnover shall be taken into account(9);
(c) institutions shall take reasonable steps to correctly determine E* and obtain the information required under point (b).
Article 501a Adjustment to own funds requirements for credit risk for exposures to entities that operate or finance physical structures or facilities, systems and networks that provide or support essential public services
1. Own funds requirements for credit risk calculated in accordance with Title II of Part III shall be multiplied by a factor of 0,75, provided that the exposure complies with all the following criteria:
(a) the exposure is includedassigned eitherto in the corporate exposure class orreferred to in Article 112, point (g), or to any of the specialisedexposure lendingclasses exposuresreferred classto in Article 147(2), point (c)(i), (ii) or (iii), with the exclusion of exposures in default;
(b) the exposure is to an entity which was created specifically to finance or operate physical structures or facilities, systems and networks that provide or support essential public services;
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(e) the cash flows that the obligor generates are predictable and cover all future loan repayments during the duration of the loan;
(f) the re-financingobligor’s refinancing risk of the exposure is low or adequately mitigated, taking into account any subsidies, grants or funding provided by one or more of the entities listed in paragraph 2, points (b)(i) and (b)(ii) of paragraph 2;
(g) the contractual arrangements provide lenders with a high degree of protection including the following:
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(n) the obligor uses derivatives only for risk-mitigation purposes;
(o) for exposures originated after 1 January 2025 the obligor has carried out an assessment whetherthat the assets being financed contribute positively to theone followingor more of the environmental objectives:
(i) climateset changeout mitigation;
(ii)in climateArticle change9 adaptation;
of Regulation (iiiEU) sustainable2020/852 use and protectiondo ofnot watersignificantly andharm marinethe resources;
(iv)other transitionobjectives toset aout circularin economythat Article, wasteor preventionthat andthe recycling;
(v)assets pollutionbeing preventionfinanced anddo control;
(vi)not protectionsignificantly harm any of healthythe ecosystemsenvironmental objectives set out in that Article.
2. For the purposes of point (e) of paragraph 1, the cash flows generated shall not be considered predictable unless a substantial part of the revenues satisfies the following conditions:
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Based on the report by EBA the Commission shall, by 28 June 2023, report to the European Parliament and to the Council on the appropriate treatment of such holdings, accompanied by a legislative proposal, where appropriate.
Article 505 Review of long-termagricultural financing
1. By 31 December 20142030, theEBA Commission shall prepare a report toon the Europeanimpact Parliamentof andthe torequirements theof Councilthis Regulation on agricultural financing, togetherincluding on:
(a) the appropriateness of a dedicated risk weight for own funds requirements for credit risk calculated in accordance with anyPart appropriateThree, proposalsTitle II, aboutfor exposures to an agricultural enterprise;
(b) where applicable, prudentially justified criteria for the appropriatenessapplication of such a dedicated risk weight, including farming practices, as well as the requirementsinclusion of thisexposures Regulation in lightthe ofcorporates, retail or secured by mortgages on immovable property exposure classes;
(c) the needalignment with the ‘farm to ensurefork’ adequatestrategy levelsset out in the communication of fundingthe Commission of 20 May 2020 entitled ‘A Farm to Fork Strategy for alla formsfair, ofhealthy longand environmentally-termfriendly financingfood forsystem’ and the economyrespective environmental impact within the meaning of Regulation (EU) 2020/852, in particular with the indicators as collected in the Union’s Farm Accountancy Data Network, showing contribution scores with regard to:
(i) net greenhouse gas emissions per hectare;
(ii) pesticides and fertilisers usage per hectare;
(iii) soil’s minerals efficiency ratios, including criticalcarbon, infrastructureammonia, projectsphosphate and nitrogen per hectare;
(iv) water use efficiency;
(v) a confirmation of positive impact on the indicators referred to in points (i) to (iv) of this point with an organic production logo of the European Union referred to in Regulation (EU) 2018/848 of the fieldEuropean Parliament and of transportthe Council ().
2. Taking into account the EBA report referred to in paragraph 1, energythe Commission shall submit the report to the European Parliament and communicationsto the Council. Where appropriate, that report shall be accompanied by a legislative proposal to amend this Regulation in order to mitigate its negative effects on agricultural financing.
3. EBA shall also prepare an intermediate report on the impact of the requirements of this Regulation on agricultural financing by 31 December 2027.
Article 506 Credit risk — credit insurance By 30 June 2024, EBA shall, in close cooperation with EIOPA, report to the Commission on the eligibility and use of credit insurance policy as a credit risk mitigation technique, including on:
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2. By 10 April 2023, the Commission shall, on the basis of the report referred to in paragraph 1 of this Article, submit a report to the European Parliament and to the Council on the application of Article 269a. The Commission’s report shall, where appropriate, be accompanied by a legislative proposal.
Article 506c Credit risk — interaction between Common Equity Tier 1 capital reductions and credit risk parameters By 31 December 2026, EBA shall report to the Commission on the consistency between the current measurement of credit risk and the individual credit risk parameters and on the treatment of any adjustments for the purpose of the computation of the IRB shortfall or IRB excess as referred to in Article 159, and on its consistency with the determination of the exposure value in accordance with Article 166 and with the estimation of LGD.
That report shall consider the maximum possible economic loss arising from a default event along with its achieved coverage in terms of Common Equity Tier 1 capital reductions, taking into account any accounting-based Common Equity Tier 1 capital reductions, including from expected credit losses or fair value adjustments, and any discounts on received exposures, and their implications for regulatory deductions.
Article 506d Prudential treatment of securitisation
1. By 31 December 2026, EBA, in close collaboration with ESMA, shall report to the Commission on the prudential treatment of securitisation transactions, differentiating between different types of securitisations, including synthetic securitisations, between originators and investors, and between STS and non-STS transactions.
2. In particular, EBA shall monitor the use of the transitional arrangement referred to in Article 465(13) and assess the extent to which the application of the output floor to securitisation exposures would affect the capital reduction obtained by originator institutions in transactions for which a significant risk transfer has been recognised, would excessively reduce the risk sensitivity and would affect the economic viability of new securitisation transactions. In such cases of a reduction of risk sensitivities, EBA may consider proposing a downward recalibration of the non-neutrality factors for transactions for which a significant risk transfer has been recognised. EBA shall also assess the appropriateness of the non-neutrality factors under both the SEC-SA and the SEC-IRBA, taking into account the historic credit performance of securitisation transactions in the Union and the reduced model and agency risks of the securitisation framework.
3. On the basis of the report referred to in paragraph 1 and taking into account related internationally agreed standards developed by the BCBS the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2027.
Article 506e Recognition of capped or floored unfunded credit protection
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Until the deadlines defined in the first two subparagraphs of this paragraph, and subject to the fourth subparagraph of this paragraph, where a CCP neither has a default fund nor has in place a binding arrangement with its clearing members that allows it to use all or part of the initial margin received from its clearing members as if they were pre-funded contributions, the information it is to report in accordance with Article 50c(1) shall include the total amount of initial margin it has received from its clearing members.
The deadlines referred to in the first and second subparagraphs of this paragraph may be extended by six months in accordance with a Commission implementing act adopted pursuant to Article 497(3) of Regulation (EU) No 575/2013.’
Article 520a Application of own funds requirements for market risk Until 1 January 2026, institutions shall continue to apply Part Three, Title IV, and the market risk requirements of Articles 430, 430b, 445 and 455 of this Regulation in the version in force on 8 July 2024.