Changes from report parliamentary committee draft to plenary report

RemovedArticle 1 – paragraph 1 – point 199, Article 495c – paragraph 2: deleted / (deleted) / (deleted)

Added– there are contractual restrictions on the ability of the obligor to perform activities that may be detrimental to lenders, including the restriction that new debt cannot be issued without the consent of existing debt providers;

RemovedRegulation (EU) No 575/2013

Added– the obligor has sufficient reserve funds fully funded in cash, or other financial arrangements, with ▌guarantors with an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model to cover the contingency funding and working capital requirements over the lifetime of the project being financed;

RemovedArticle 1 – paragraph 1 – point 199, Article 495d – paragraph 2: deleted / (deleted) / (deleted)

Added– the income generated by the financed project is availability-based or subject to a rate-of-return regulation or take-or-pay contract; for this purpose "availability-based" means that, once construction is completed, the obligor is entitled, as long as contract conditions are fulfilled, to payments from its contractual counterparties which cover operating and maintenance costs, debt service costs and equity returns as the obligor operates the project, and these payments are not subject to swings in demand, such as traffic levels, and are adjusted typically only for lack of performance or lack of availability of the asset to the public;

RemovedRegulation (EU) No 575/2013

Added– where the revenues of the obligor are not funded by payments from a large number of users, the source of repayment of the obligation depends on one main counterparty and that main counterparty is one of the following:

RemovedArticle 1 – paragraph 1 – point 199 a (new), Article 501 – paragraph 1: (199a) in Article 501(1), the definitions is amended as follows: / E* is / the total amount owed to the institution, its subsidiaries, its parent undertakings and other subsidiaries of those parent undertakings, including any exposure in default, but excluding claims or contingent claims secured on residential property collateral, by the SME or the group of connected clients of the SME; / If E* = 0, then RWEA* = 0,7619 RWEA

Added a central bank, a central government, a regional government or a local authority, provided that they are assigned a risk weight of 0 % in accordance with Articles 114 and 115, or are assigned an ECAI rating with a credit quality step of at least 3;

RemovedRegulation (EU) No 575/2013

Added a public sector entity, provided that that entity is assigned a risk weight of 20 % or below in accordance with Article 116, or is assigned an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model;

RemovedArticle 1 – paragraph 1 – point 201 – point b, Article 501a – paragraph 1 – point f: (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);

Added a corporate entity which has been assigned an ECAI rating with a credit quality step of at least 3, or, if not externally rated, are assigned with a rating equivalent to a step 3 or higher with the bank validated internal rating model.

RemovedRegulation (EU) No 575/2013

Added– the contractual provisions governing the exposure to the obligor provide for a high degree of protection for the lending institution in case of a default of the obligor;

RemovedArticle 1 – paragraph 1 – point 201 – point b a (new), Article 501a – paragraph 1 – point o: (b a) point (o) is replaced by the following: / ‘(o) 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.’ / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted)

Added– the main counterparty or other counterparties which meet the eligibility criteria for the main counterparty effectively protect the lending institution against losses resulting from the termination of the project;

Removed(http://www.at4am.ep.parl.union.eu/at4am/ameditor.html?documentID=35461&locale=en#stv!lCnt=1&langISO0=en&crCnt=1&crID0=125046)

Added– all assets and contracts necessary to operate the project have been pledged to the lending institution to the extent permitted by applicable law;

RemovedRegulation (EU) No 575/2013

Added– ▌the lending institution is able to take control of the obligor entity in case of a default event;

RemovedArticle 1 – paragraph 1 – point 202, Article 501c – paragraph 2: EBA shall submit a report on its findings to the European Parliament, to the Council and to the Commission by 28 June 2023. On the basis of that report, the Commission shall, where appropriate, submit a legislative proposal to the European Parliament and to the Council.

Added(iii) 100 % where the project to which the exposure is related is in the operational phase and the exposure does not meet the conditions laid down in point (ii) of this subparagraph;

RemovedRegulation (EU) No 575/2013

Added(d) for the purposes of point (c)(ii), third indent, the cash flows generated shall not be considered predictable unless a substantial part of the revenues satisfies one or more of the following conditions:

RemovedArticle 1 – paragraph 1 – point 203, Article 506 – paragraph 1: By 31 December 2026, EBA, in cooperation with EIOPA, shall report to the Commission on the eligibility and use of policy insurance as credit risk mitigation techniques and on the appropriateness of the associated risk parameters referred to in Part Three, Title II, Chapter 3 and 4.

Added(i) the revenues are availability-based;

Added(ii) the revenues are subject to a rate-of-return regulation;

Added(iii) the revenues are subject to a take-or-pay contract;

Added(e) for the purposes of point (c), the operational phase shall mean the phase in which the entity that was specifically created to finance the project, or that is economically comparable, meets both of the following conditions:

Added(i) the entity has a positive net cash flow that is sufficient to cover any remaining contractual obligation;

Added(ii) the entity has a declining long term debt.

Added4. EBA shall develop draft regulatory technical standards specifying in further detail the conditions under which the criteria set out in paragraph 3, point (a)(i) and point (c)(ii), are met.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 1 year after the date of entry into force of this Regulation].

AddedPower 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.’;

Added(42) Article 123 is replaced by the following:

Added‘Article 123 Retail exposures

Added1. Exposures that comply with all of the following criteria shall be considered retail exposures:

Added(a) the exposure is an exposure to one or more natural persons or an exposure to a SME within the meaning of Article 5, point (8);

Added(aa) the total amount owed to the institution, its parent undertakings and its subsidiaries, by the obligor or group of connected clients, including any exposure in default but excluding exposures secured by residential property up to the property value shall not, to the knowledge of the institution, which shall take reasonable steps to confirm the situation, exceed EUR 1 million;

Added(b) the exposure represents one of a significant number of exposures with similar characteristics, such that the risks associated with such exposure are substantially reduced;

Added(c) the institution concerned treats the exposure in its risk management framework and manages the exposure internally as retail exposure consistently over time and in a manner that is similar to the treatment by the institution of other retail exposures.

AddedThe present value of retail minimum lease payments shall be eligible for the retail exposure class.

AddedEBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, to specify proportionate diversification methods under which an exposure is to be considered as one of a significant number of similar exposures as specified in point (b), by [OP please insert the date = 1 year after entry into force of this Regulation].

AddedWhere any of these criteria are not met for an exposure to one or more natural persons, the exposure shall be considered retail exposure and the risk weight shall be 100%.

Added2. The following exposures shall not be considered to be retail exposures:

Added(a) non-debt exposures conveying a subordinated, residual claim on the assets or income of the issuer;

Added(b) debt exposures and other securities, partnerships, derivatives, or other vehicles, the economic substance of which is similar to the exposures specified in point (a);

Added(c) all other exposures in the form of securities.

Added3. Retail exposures as referred to in paragraph 1 shall be assigned a risk weight of 75 %, with the exception of transactor exposures, which shall be assigned a risk weight of 45 %.

Added4. By way of derogation from paragraph 3, exposures due to loans granted by an institution to pensioners or employees with a permanent contract against the unconditional transfer of part of the borrower’s pension or salary to that institution shall be assigned a risk weight of 35 %, provided that all the following conditions are met:

Added(a) to repay the loan, the borrower unconditionally authorises the pension fund or employer to make direct payments to the institution by deducting the monthly payments on the loan from the borrower’s monthly pension or salary;

Added(b) the risks of death, inability to work, unemployment or reduction of the net monthly pension or salary of the borrower are properly covered through an insurance policy to the benefit of the institution;

Added(c) the monthly payments to be made by the borrower on all loans that meet the conditions set out in points (a) and (b) do not in aggregate exceed 20 % of the borrower’s net monthly pension or salary;

Added(d) the maximum original maturity of the loan is equal to or less than ten years.’;

Added(43) the following Article 123a is inserted:

Added‘Article 123a Exposures with a currency mismatch

Added1. Where the following conditions are met for an exposure to natural person or for an exposure to natural persons which is assigned to ▌the exposure classes laid down in point (h) ▌of Article 112 or, if it is secured by residential immovable property, to the exposure class laid down in point (i) of Article 112, the risk weight assigned to such exposure in accordance with Chapter 2 shall be multiplied by a factor of 1,5, whereby the resulting risk weight shall not be higher than 150 %, where the following conditions are met:

Added(a) the exposure is ▌a loan denominated in a currency which is different from the currency of the obligor's source of income;