Changes from report parliamentary committee draft to plenary report

AddedEBA, EIOPA and ESMA shall report its findings to the Commission by 31 December 2028.

AddedOn 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 to extend the application of the treatment referred to in paragraph 3, subparagraph 3 by 4 years at the most.

Added4. By way of derogation from Article 92(5)(a), point (iv), parent institutions, parent financial holding companies or parent mixed financial holding companies, stand-alone institutions in the EU or stand-alone subsidiary institutions in Member States 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, Sections 3 and 4, where the same exposure values are calculated in accordance with the approach set out in Part Three, Title II, Chapter 3, Section 6 for the purposes of the total un-floored risk exposure amount.

AddedThe Commission may, while taking into account the EBA report referred to in Article 514, adopt a legislative proposal in accordance with Article 462 to ▌modify the value of alpha, where appropriate.

Added5. By way of derogation from Article 92(5)(a), point (i), Member States may, allow parent institutions, parent financial holding companies or parent mixed financial holding companies, stand-alone institutions in the EU or stand-alone subsidiary institutions in Member States to assign the following risk weights provided that all the conditions in the second subparagraph are met:

Added(a) until 31 December 2032, a risk weight of 10 % to the part of the exposures secured by mortgages on residential property up to 55 % of the property value remaining after any senior or pari passu ranking liens not held by the institution have been deducted,

Added(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 remaining after any senior or pari passu ranking liens not held by the institution have been deducted, provided that the adjustment to own funds requirements for credit risk referred to in Article 501 is not applied.

AddedFor the purposes of assigning the risk weights in accordance with the first subparagraph, all of the following conditions shall be met:

Added(a) the qualifying exposures are located in the Member State that has exercised the discretion;

Added(b) over the last eight years the institution’s losses on the part of such exposures up to 55 % of the property value do not exceed on average 0,25 % of the total amount, across all such exposures, of credit obligations outstanding in a given year;

Added(c) for the qualifying exposures the institution has both the following claims in the event of the default or non-payment of the obligor:

Added(i) a claim on the residential immovable property securing the exposure;

Added(ii) a claim on the other assets and income of the obligor;

Added(d) the competent authority has verified that the conditions in points (a), (b) and (c) are met.

AddedWhere the discretion referred to in the first subparagraph has been exercised and all the associated conditions in the second subparagraph are met, institutions may assign the following risk weights to the remaining part of the exposures referred to in the second subparagraph, point (b), until 31 December 2032:

Added(a) 52,5 % during the period from 1 January 2030 to 31 December 2030;

Added(b) 60 % during the period from 1 January 2031 to 31 December 2031;

Added(c) 67,5 % during the period from 1 January 2032 to 31 December 2032.

AddedWhen Member States exercise that discretion, they shall notify EBA and substantiate their decision. Competent authorities shall notify the details of all the verifications referred to in the first subparagraph, point (c), to EBA.

AddedEBA shall monitor the use of the transitional treatment in the first subparagraph and report to the Commission by 31 December 2028 on the appropriateness of the associated risk weights.

AddedOn 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 2030, to extend the application of the treatment referred to in paragraph 5, by four years at the most;

Added5 a. By way of derogation from Article 92(5), when the standardised risk-weighted exposure amounts for credit risk and dilution risk referred to in paragraph 4, point (a), and for counterparty risk arising from the trading book business as referred to in point (f) of that paragraph shall be calculated using the SEC-SA following Article 261 or Article 262, parent institutions, parent financial holding companies or parent mixed financial holding companies, stand-alone institutions in the Union shall be permitted, until the completion of the comprehensive review of the Union securitisation framework as part of the Capital Markets Union Action Plan, to apply the following modifications:

Added(a) p = 0,25 for a position in an STS securitisation;

Added(b) p = 0,5 for a position in a non-STS securitisation.’;

Added(197) the following Article 494d is inserted:

Added‘Article 494d Reversal from the IRB Approach to the Standardised Approach

AddedBy way of derogation from Article 149, paragraphs 1, 2 and 3, an institution may from [OP: insert date of entry into force of this regulation] until 31 December 2027, revert to the Standardised Approach for one or more of the exposure classes provided for in Article 147(2), where all the following conditions are met:

Added(a) the institution was already on [OP please insert date = one day before the date of entry into force of this amending Regulation] in existence and authorised by its competent authority to treat those exposure classes under the IRB Approach;

Added(b) the institution requests a reversal to the Standardised Approach only once during the period set out in this Article;

Added(c) the request to revert to the Standardised Approach is not made with a view to engage in regulatory arbitrage;

Added(d) the institution has formally notified the competent authority that it wishes to revert to the Standardised Approach for those exposure classes at least six months before it effectively does revert to that approach;

Added(e) the competent authority has not objected to the institution’s request to such reversal within three months from the reception of the notification referred to in point (d).’;

Added(198) Article 495 is replaced by the following:

Added‘Article 495 Treatment of equity exposures under the IRB Approach

Added1. By way of derogation from Article 107(1)▌, institutions that have received the permission to apply the Internal Ratings Based Approach to calculate the risk weighted exposure amount for equity exposures shall, until 31 December 2029 and without prejudice to Article 495a(3), calculate the risk weighted exposure amount for each equity exposure for which they have received the permission to apply the Internal Ratings Based Approach as the higher of the following:

Added(a) the risk weighted exposure amount calculated in accordance with Article 495a, paragraphs 1 and 2;

Added(b) the risk weighted exposure amount calculated under this Regulation as it stood prior to [OP please insert the date = date of entry into force of this amending Regulation]

Added2. Instead of applying the treatment laid down in paragraph 1, institutions that have received the permission to apply the Internal Ratings Based Approach to calculate the risk weighted exposure amount for equity exposures may alternatively choose to apply the treatment set out in Article 133 and the transitional arrangements in Article 495a to all of their equity exposures at any time until 31 December 2029.

AddedFor the purposes of this paragraph, the conditions to revert to the use of less sophisticated approaches laid down in Article 149 shall not apply.

Added3. Institutions applying the treatment laid down in paragraph 1 shall calculate EL in accordance with Article 158, paragraphs 7, 8 or 9, as applicable, as those paragraphs stood on ... [day before the date of entry into force of this Regulation].

AddedExpected loss amounts calculated in accordance with Article 158(7), (8) or (9), as applicable, as those paragraphs stood on ... [day before the date of entry into force of this amending Regulation] shall be deducted from Common Equity Tier 1 items under Article 36(1), point (d).

Added4. Where institutions request the permission to apply the IRB Approach to calculate the risk weighted exposure amount for equity exposures, competent authorities shall not grant such permission after [OP please insert the date = date of application of this Regulation].’;

Added(199) the following Articles are inserted:

Added‘Article 495a Transitional arrangements for equity exposures

Added1. By way of derogation from the treatment laid down in Article 133(3), equity exposures shall be assigned the higher of the risk-weight applicable on ... [one day before the date of entry into force of this amending Regulation], capped at 250%, and the following risk-weights:

Added(a) 100 % during the period from 1 January 2025 to 31 December 2025;

Added(b) 130 % during the period from 1 January 2026 to 31 December 2026;

Added(c) 160 % during the period from 1 January 2027 to 31 December 2027;

Added(d) 190 % during the period from 1 January 2028 to 31 December 2028;

Added(e) 220 % during the period from 1 January 2029 to 31 December 2029.

Added2. By way of derogation from the treatment laid down in Article 133(4), equity exposures shall be assigned the higher of the risk weight applicable on [one day before the date of entry into force of this amending Regulation] and the following risk-weights:

Added(a) 100 % during the period from 1 January 2025 to 31 December 2025;

Added(b) 160 % during the period from 1 January 2026 to 31 December 2026;

Added(c) 220 % during the period from 1 January 2027 to 31 December 2027;

Added(d) 280 % during the period from 1 January 2028 to 31 December 2028;

Added(e) 340 % during the period from 1 January 2029 to 31 December 2029.

Added3. By way of derogation from Article 133, institutions may continue to assign the same risk weight that was applicable as of ... [OP please insert the date = one day before the date of entry into force of this amending Regulation] to equity exposures, including the part of the exposures not deducted from own funds in accordance with Article 471, to entities of which they have been a shareholder on [adoption date] for six consecutive years and over which they - or together with the network the institutions belong to - exercise significant influence or control in the meaning of Directive 2013/34/EU, or the accounting standards to which an institution is subject under Regulation (EC) No 1606/2002, or a similar relationship between any natural or legal person or network of institutions and an undertaking or where an institution is in the capacity to appoint at least one member of the management body of the entity.

Added1. 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 LGDs are used, shall be the applicable LGD input floors provided for in Article 161(4), multiplied by the following factors:

Added(a) 50 % during the period from 1 January 2025 to 31 December 2027;

Added(b) 80 % during the period from 1 January 2028 to 31 December 2028;