Changes from plenary report to adopted text

Removed(9) ‘protection-provider-RW-floor’ refers to the risk weight applicable to a comparable, direct exposure to the protection provider;

Removed(10) for an exposure to which an institution applies the IRB approach by using its own estimates of LGD under Article 143, ‘recognised’ unfunded credit protection means an unfunded credit protection the effect of which on the calculation of risk-weighted exposure amounts or expected loss amounts of the underlying exposure is taken into account with one of the following methods, in accordance with Article 108(2a):

Removed(a) PD/LGD modelling adjustment approach;

Removed(b) substitution of risk parameters approach under A-IRB, in accordance with Article 192, point (8);

Removed(11) ‘SA-CCF’ means the percentage applicable under Chapter 2, by which the nominal value of an off-balance sheet item is multiplied to calculate its exposure value in accordance with Article 111(2);

Removed(12) ‘IRB-CCF’ means own estimates of CCF.;

Removed(59) Article 143 is amended as follows:

Removed(a) paragraph 2 is replaced by the following:

Removed‘2. Prior permission to the use the IRB Approach, including own estimates of LGDs and CCFs, shall be required for each exposure class and for each rating system and for each approach to estimating LGDs and CCFs used.’;

Removed(b) in paragraph 3, first subparagraph, points (a) and (b) are replaced by the following:

Removed‘(a) material changes to the range of application of a rating system that the institution has received permission to use;

Removed(b) material changes to a rating system that the institution has received permission to use.’;

Removed(c) paragraph 4 and 5 are replaced by the following:

Removed‘4. Institutions shall notify the competent authorities of all changes to rating systems.

Removed5. EBA shall develop draft regulatory technical standards to specify the conditions for assessing the materiality of the use of an existing rating system for other additional exposures not already covered by that rating system and changes to rating systems under the IRB Approach.

RemovedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert date = 18 months after the entry into force of this amending Regulation].

RemovedPower is delegated to the Commission to adopt the regulatory technical standards referred to the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.’;

Removed(60) in Article 144(1), the first subparagraph is amended as follows:

Removed(a) point (f) is replaced by the following:

Removed‘(f) the institution has validated each rating system during an appropriate time period prior to the permission to use that rating system, has assessed during that time period whether the rating system are suited to the range of application of the rating system, and has made necessary changes to those rating systems following from its assessment;’;

Removed(b) point (h) is replaced by the following:

Removed‘(h) the institution has assigned and continues to assign each exposure in the range of application of a rating system to a rating grade or pool of this rating system;’;

Removed(c) paragraph 2 is replaced by the following:

Removed‘2. EBA shall develop draft regulatory technical standards to specify the assessment methodology competent authorities shall follow when assessing the compliance of an institution with the requirements to use the IRB Approach.

RemovedEBA shall submit those draft regulatory technical standards to the Commission by 31 December 2025.

RemovedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.’;

Removed(61) Article 147 is amended as follows:

Removed(a) paragraph 2 is replaced by the following:

Removed‘2. Each exposure shall be assigned to one of the following exposure classes:

Removed(a) exposures to central governments and central banks;

Removed(a1) exposures to regional and local authorities and to public sector entities (‘RGLA-PSE’), which shall be divided into the following exposure classes:

Removed(i) exposures to regional and local authorities (‘RGLAs’);

Removed(ii) exposures to public sector entities (‘PSEs’);

Removed(b) exposures to institutions;

Removed(c) exposures to corporates ▌shall be assigned to the following exposure classes:

Removed(i) general corporates;

Removed(ii) specialised lending (‘SL’) exposures;

Removed(iii) corporate purchased receivables;

Removed(d) retail exposures ▌shall be assigned to the following exposure classes:

Removed(i) qualifying revolving retail exposures (‘QRREs’);

Removed(ii) retail exposures secured by residential property;

Removed(iii) retail purchased receivables;

Removed(iv) other retail exposures;

Removed(e) equity exposures;

Removed(e1) exposures in the form of units or shares in a CIU;

Removed(f) items representing securitisation positions;

Removed(g) other non credit-obligation assets.

Removed(b) in paragraph 3, point (a) is deleted;

Removed(c) the following paragraph 3a is inserted:

Removed‘3a. Exposures to regional governments, local authorities or public sector entities shall ▌be assigned to the exposure classes referred to in paragraph 2, point (a1)(i) or (a1)(ii), respectively unless they are treated as exposures to the central government according to Articles 115 or 116. Exposures treated as exposures to central governments according to Articles 115 or 116 shall be assigned to the exposure class referred to in paragraph 2, point (a).’;

Removed(d) in paragraph 4, points (a) and (b) are deleted;

Removed(e) paragraph 5 is amended as follows:

Removed(i) in point (a), point (ii) is replaced by the following:

Removed‘(ii) exposures to an SME within the meaning of Article 5, point (8), provided in that case that the total amount owed to the institution and parent undertakings and its subsidiaries, including any exposure in default, by the obligor client or group of connected clients, but excluding exposures secured by residential property up to the property value does not, to the knowledge of the institution, ▌which shall take reasonable steps to verify the amount of that exposure exceed EUR 1 million;

Removed(iii) exposures secured by residential property, including first and subsequent liens, term loans, revolving home equity lines of credit, and exposures as referred to in Article 108, paragraphs 3 and 4, regardless of the exposure size, provided that the exposure is either of the following:

Removed– an exposure to a natural person;

Removed– an exposure to associations or cooperatives of individuals that are regulated under national law and exist with the only purpose of granting their members the use of a primary residence in the property securing the loan;’;

Removed(ii) the following subparagraphs are added:

Removed‘Exposures fulfilling all the conditions laid down in points (a)(iii), (b), (c), (d) shall be assigned to the exposure class ‘retail exposures secured by residential property’ as referred to in paragraph 2, point (d)(ii).

RemovedBy way of derogation from the third subparagraph, competent authorities may exclude from the exposure class ‘retail exposures secured by residential property’ as referred to in paragraph 2, point (d)(ii), loans to natural persons who have mortgaged more than four properties or housing units and assign those loans to the corporate exposure class.’;