Changes from plenary report to adopted text

Removed‘The adjustment referred to in the first subparagraph may only be carried out until 31 December 2024 and its effects may last for as long as the corresponding exposures are included in the institution's own LGD estimates.’;

Removed(b) the following paragraph is added:

Removed'2a. The Commission shall, by 31 December 2026, and every two years thereafter, assess if the level of defaulted exposures in the balance sheets of the institutions has increased significantly, or it expects a significant deterioration in the institutions’ asset quality, or if the degree of development of secondary markets for defaulted exposures is not adequate to ensure efficient disposals of defaulted exposures by institutions, also taking into consideration the regulatory developments on securitisation.

RemovedThe Commission shall review the appropriateness of the derogation set out in paragraph 1 and it shall, where appropriate, adopt delegated acts in accordance with Article 462 to extend, reintroduce, or amend, as needed, the adjustment provided in this Article.';

Removed(200) in Article 501(2), point (b) is replaced by the following:

Removed‘(b) an SME shall have the meaning laid down in Article 5, point (8);’;

Removed(201) Article 501a(1) is amended as follows:

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

Removed‘(a) the exposure is assigned to the corporate exposure class referred to either in Article 112, point (g), or in Article 147(2), point (c), with the exclusion of exposures in default;’;

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

Removed‘(f) the obligor’s refinancing risk ▌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);’;

Removed(ba) point (o) is replaced by the following:

Removed‘(o) for exposures originated after ... [the date of publication of this Regulation], the obligor has carried out a positive assessment that the assets being financed contribute to one or more environmental objectives set out in Article 9 of Regulation (EU) 2020/852;’;

Removed(202) Article 501c, is replaced by the following:

Removed‘Article 501c Prudential treatment of exposures to environmental and/or social factors

RemovedEBA, after consulting the ESRB, shall, on the basis of available data ▌ assess whether the dedicated prudential treatment of exposures related to assets or liabilities, subject to impacts from environmental and/or social factors should be adjusted. In particular, EBA shall assess:

Removed(a) the availability and accessibility of reliable and consistent ESG data for each exposure class determined in accordance with Title II of Part III;

Removed(b) the feasibility of introducing a classification system to identify and qualify the exposures, for each exposure class determined in accordance with Title II of Part III, based on a common set of principles to ESG risk classification, using the information on transition and physical risk indicators made available by sustainability disclosure reporting frameworks adopted in the Union and where available internationally, the guidance and conclusions coming from the supervisory stress-testing or scenario analysis of climate-related financial risks conducted by the EBA or the competent authorities and if appropriately reflecting the ESG risks, the relevant ESG score of the ECAI credit risks rating by a nominated ECAI;

Removed(c) the effective riskiness of exposures related to assets and activities subject to impacts from environmental and/or social factors compared to the riskiness of other exposure;

Removed(d) the potential short, medium and long-term effects of an adjusted dedicated prudential treatment of exposures related to assets and activities subject to impacts from environmental and/or social factors on financial stability and bank lending in the Union;

Removed(e) the targeted enhancements that could be considered within the current prudential framework and the possible additional and more comprehensive revisions to the framework that should be considered, taking into consideration the developments agreed at international level by the Basel Committee.

RemovedEBA shall submit a report on its findings to the European Parliament, to the Council and to the Commission by 31 December 2024.

RemovedOn the basis of that report, the Commission shall, if appropriate, submit to the European Parliament and to the Council a legislative proposal within one year of the publication of the EBA report.’;

Removed(203) Articles 505 and 506 are replaced by the following:

Removed‘Article 505 Review of agricultural financing

RemovedBy 31 December 2030, EBA shall report to the Commission on the impact of the requirements of this Regulation on agricultural financing including:

Removed(a) the appropriateness of a dedicated risk weight for own funds requirements for credit risk calculated in accordance with Title II of Part III for exposures to an agricultural enterprise;

Removed(b) if applicable, prudentially justified criteria for the application of a dedicated risk weight including farming practices as well as the inclusion of exposures in the corporate, retail or immovable property exposures class;

Removed(c) the alignment with the “farm to fork” strategy and the respective environmental impact within the meaning of Regulation (EU) 2020/852, notably with the indicators as collected in the Union’s Farm Accountancy Data Network, showing contribution scores with regard to:

Removed(i) net greenhouse gas emissions per hectare;

Removed(ii) pesticides and fertilizers usage per hectare;

Removed(iii) soil’s minerals efficiency ratios including carbon, ammonia, phosphate and nitrogen per hectare;

Removed(iv) water use efficiency;

Removed(v) a confirmation of positive impact on these four indicators with an EU-label for organic agriculture as meant in Council Regulation (EC) No 834/2007*.

RemovedThe Commission shall submit a report thereon to the European Parliament and to 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.

RemovedBy 30 June 2024, EBA shall in close collaboration with EIOPA, report to the Commission on the eligibility and use of policy insurance as credit risk mitigation techniques including:

Removed(a) the appropriateness of the associated risk parameters referred to in Part Three, Title II, Chapter 3 and 4;

Removed(b) an analysis of the effective and observed riskiness of credit risk exposures where a credit insurance was recognised as a credit risk mitigation technique;

Removed(c) the consistency of own funds requirements laid down in this Regulation with the outcomes of the analysis under points (a) and (b) of this paragraph.

RemovedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal, to amend the treatment applicable to credit insurance referred to in Part Three, Title II.

Removed____________________

Removed* Council Regulation (EC) No 834/2007 of 28 June 2007 on organic production and labelling of organic products and repealing Regulation (EEC) No 2092/91 (OJ L 189, 20.7.2007, p. 1).’;

Removed(204) the following Article 506c is inserted:

Removed‘Article 506c Credit risk – interaction between Common equity Tier 1 reductions and credit risk parameters

RemovedBy 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 excess as referred to in Article 159, and on its consistency with the determination of the exposure value in accordance with Article 166 of this Regulation and with the LGD estimation. The 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.’;

Removed(204a) the following Articles are inserted:

Removed‘Article 506ca

RemovedPrudential treatment of securitisation

RemovedBy 31 December 2025, EBA, in close collaboration with ESMA, shall report to the Commission on the prudential treatment of securitisation transactions, differentiating between different types of securitisation, including synthetic securitisation. In particular, the EBA shall assess the extent to which the application of the output floor to securitisation exposures would affect the capital reduction obtained by originating banks in transactions for which a significant risk transfer has been recognized, would excessively reduce the risk-sensitivity and would affect the economic viability of new transactions. In such cases, of a reduction of risk sensitivities, the EBA may consider proposing a downward recalibration of the non- neutrality factors for transaction for which a significant risk transfer has been recognised.

RemovedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2026.’;

RemovedPrudential treatment of securities financing transactions

RemovedBy 31 December 2025, EBA, in close collaboration with ESMA, shall report to the Commission on the impact of the new framework for securities financing transactions in terms of capital requirements. EBA shall assess whether a recalibration of the associated risk weights in the Standardised Approach is appropriate, given the associated risks with respect to short term maturities, specifically for residual maturities below one year.

RemovedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2027.’;

Removed(204b) the following Article is inserted:

Removed‘Article 518c

RemovedReview of the application of the output floor

Removed1. By 31 December 2027 the EBA shall assess, and issue an opinion on, the level of compliance with Article 92-a(2) in light of potential financial stability concerns and the developments in the banking union, as regards a more uniform degree of deposit insurance coverage across Member States and the pooling of resources at Union level.

Removed2. Upon the EBA’s publishing the opinion referred to in paragraph 1, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal to amend the level of application set out in Article 92-a(1) of this Regulation, taking into consideration the opinion referred to in paragraph 1 of this Article.’;

Removed(205) the following Articles 519c and 519d are inserted:

Removed‘Article 519c Minimum haircut floors framework for SFTs