Changes from report parliamentary committee draft to plenary report

Added(ii) ranks pari passu or senior in all respects to the specific issuing programme or facility or to senior unsecured exposures of that issuer, as relevant.’;

Added(57) Article 141 is replaced by the following:

Added‘Article 141 Domestic and foreign currency items

Added1. A credit assessment that refers to an item denominated in the obligor's domestic currency shall not be used to derive a risk weight for an exposure on that same obligor that is denominated in a foreign currency.

Added2. By way of derogation from paragraph 1, where an exposure arises through an institution's participation in a loan that has been extended by, or has been guaranteed against convertibility and transfer risk, by a multilateral development bank listed in Article 117(2) the preferred creditor status of which is recognised in the market, the credit assessment on the obligor’s domestic currency item may be used to derive a risk weight for an exposure on that same obligor that is denominated in a foreign currency.

AddedFor the purposes of the first subparagraph, where the exposure denominated in a foreign currency is guaranteed against convertibility and transfer risk, the credit assessment on the obligor’s domestic currency item may only be used for risk weighting purposes on the guaranteed part of that exposure. The part of that exposure that is not guaranteed shall be risk-weighted based on a credit assessment on the obligor that refers to an item denominated in that foreign currency.’;

Added(58) Article 142, paragraph 1 is amended as follows:

Added(a) the following points (1a) to (1e) are inserted:

Added‘(1a) ‘exposure class’ means any of the exposure classes referred to in Article 147(2), points (a), (a1)(i), (a1)(ii), (b), (c)(i), (c)(ii), (c)(iii), (d)(i), (d)(ii), (d)(iii), (d)(iv), (e), (e1), (f) and (g);

Added(1b) ‘corporate exposure class’ means any of the exposure classes referred to in Article 147(2), points (c)(i), (c)(ii) and (c)(iii);

Added(1c) ‘corporate exposure’ means any exposure assigned to any of the exposure classes referred to in Article 147(2), points (c)(i), (c)(ii) and (c)(iii);

Added(1d) ‘retail exposure class’ means any of the exposure classes referred to in Article 147(2), points (d)(i), (d)(ii), (d)(iii) and (d)(iv);

Added(1e) ‘retail exposure’ means any exposure assigned to any of the exposure classes referred to in Article 147(2), points (d)(i), (d)(ii), (d)(iii) and (d)(iv);’;

Added(b) point (2) is replaced by the following:

Added‘(2) ‘type of exposures’ means a group of homogeneously managed exposures▌, which may be limited to a single entity or a single sub-set of entities within a group provided that the same type of exposures is managed differently in other entities of the group;’;

Added(c) points (4) and (5) are replaced by the following:

Added‘(4) ‘large regulated financial sector entity’ means a financial sector entity which meets all the following conditions:

Added(a) the entity’s total assets, or the total assets of its parent company where the entity has a parent company, calculated on an individual or consolidated basis, are greater than or equal to EUR 70 billion , using the most recent audited financial statement or consolidated financial statement in order to determine asset size;

Added(b) the entity is subject to prudential requirements, directly on an individual or consolidated basis, or indirectly from the prudential consolidation of its parent undertaking, in accordance with this Regulation, Regulation (EU) 2019/2033, Directive 2009/138/EC, or legal prudential requirements of a third country at least equivalent to those Union acts;

Added(5) ‘unregulated financial sector entity’ means a financial sector entity that does not fulfil the condition laid down in point (4)(b);’;

Added(d) the following point (5a) is inserted:

Added‘(5a) ‘large corporate’ means any corporate undertaking having consolidated annual sales of more than EUR 500 million or belonging to a group where the total annual sales for the consolidated group is more than EUR 500 million.’;’

Added(e) the following points (8) to (12) are added:

Added‘(8) ‘PD/LGD modelling adjustment approach’ refers to modelling an adjustment of the LGD or modelling an adjustment of both the PD and the LGD of the underlying exposure in accordance with Article 183(1a);

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

Added(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):

Added(a) PD/LGD modelling adjustment approach;

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

Added(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);

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

Added(59) Article 143 is amended as follows:

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

Added‘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.’;

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

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

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

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

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

Added5. 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.

AddedEBA 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].

AddedPower 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.’;

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

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

Added‘(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;’;

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

Added‘(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;’;

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

Added‘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.

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

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(61) Article 147 is amended as follows:

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

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

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

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

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

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

Added(b) exposures to institutions;

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

Added(i) general corporates;