Changes from report parliamentary committee draft to plenary report

RemovedRegulation (EU) No 575/2013

Added(75c) ‘non-income producing real estate exposure’ (non-IPRE exposure) means any exposure secured by one or more residential or commercial immovable properties that is not an IPRE exposure;

RemovedArticle 1 – paragraph 1 – point 45, Article 125 – paragraph 2 – introductory part: 2. An exposure secured by a residential property that does not meet any of the conditions laid down in Article 124(2), point (a), points (i) to (iva), shall be assigned the higher between the risk weight set in accordance with the following Table 6aaa, and the risk weight set in accordance with Article 124(7):

Added(75d) ‘non-ADC exposure’ means any exposure secured by one or more residential or commercial immovable properties that is not an ADC exposure;

RemovedRegulation (EU) No 575/2013

Added(75e) ‘exposure secured by residential property’, or ‘exposure secured by a mortgage on residential property’, or ‘exposure secured by residential property collateral’, or ‘exposure secured by residential immovable property’, means an exposure secured by ▌residential property or an exposure regarded as such in accordance with Article 108(3);

RemovedArticle 1 – paragraph 1 – point 46, Article 126 – paragraph 1 – point b: (b) the remaining part of the exposure, if any, shall be treated as an exposure that is not secured by this immovable property, in the exposure class applicable to the counterparty.

Added(75f) ‘exposure secured by commercial immovable property’, or ‘exposure secured by a mortgage on commercial immovable property’, or ‘exposure secured by commercial immovable property collateral’ means an exposure secured by a ▌commercial immovable property▌;

RemovedRegulation (EU) No 575/2013

Added(75g) ‘exposure secured by immovable property’, or ‘exposure secured by a mortgage on immovable property’, or ‘exposure secured by immovable property collateral’ means an exposure secured by a ▌residential or commercial immovable property or an exposure regarded as such in accordance with Article 108(3);’;

RemovedArticle 1 – paragraph 1 – point 47, Article 126a – paragraph 2 – introductory part: 2. ADC exposures to residential property, however, may be risk weighted at 100 %, provided that, the institution applies sound origination and monitoring standards which meet the requirements of Articles 74 and 79 of Directive 2013/36/EU and where at least one of the following conditions is met:

Added(t) points (78) and (79) are replaced by the following:

RemovedRegulation (EU) No 575/2013

Added‘(78) ‘one-year default rate’ means the ratio between the number of obligors or where the classification as defaulted is applied at facility level pursuant to the second subparagraph of Article 178(1), facilities in respect of which a default is considered to have occurred during a period that starts from one year prior to a date of observation T, and the number of obligors, or ▌where the classification as defaulted is applied at facility level pursuant to the second subparagraph of Article 178(1), facilities assigned to this grade or pool one year prior to that date of observation T;

RemovedArticle 1 – paragraph 1 – point 48 – point a, Article 127 – paragraph 1 – subparagraph 2 – introductory part: For the purposes of calculating the specific credit risk adjustments referred to in this paragraph, institutions shall include in the calculation any positive difference between the amount owed by the obligor on that exposure and the sum of:

Added(79) ‘ADC exposures’ or ‘land acquisition, development and construction exposures’ means loans to corporates or special purpose entities financing any land acquisition for development and construction purposes, or financing development and construction of any residential or commercial immovable property;’;

RemovedRegulation (EU) No 575/2013

Added(u) point (114) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 48 – point a, Article 127 – subparagraph 2 – point i: (i) the additional own funds reduction if that exposure was written off fully; and

Added‘(114) ‘indirect holding’ means any exposure to an intermediate entity that has an exposure to capital instruments issued by a financial sector entity or to liabilities issued by an institution where, in the event the capital instruments issued by the financial sector entity or the liabilities issued by the institution were permanently written off, the loss that the institution would incur as a result would not be materially different from the loss the institution would incur from a direct holding of those capital instruments issued by the financial sector entity or of those liabilities issued by the institution;’

RemovedRegulation (EU) No 575/2013

Added(v) point (126) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 49, Article 128 – paragraph 1 – point a: (a) debt exposures which are subordinated to claims of other ordinary unsecured creditors;

Added‘(126) ‘synthetic holding’ means an investment by an institution in a financial instrument the value of which is directly linked to the value of the capital instruments issued by a financial sector entity or to the value of the liabilities issued by an institution;’;

RemovedRegulation (EU) No 575/2013

Added(w) point (144) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 50 a (new), Article 129 – paragraph 4: (50 a) Article 129(4) is amended as follows: / "4. Covered bonds for which a directly applicable credit assessment by a nominated ECAI is available shall be assigned a risk weight in accordance with Table 6a which corresponds to the credit assessment of the ECAI in accordance with Article 136."

Added‘(144) ‘trading desk’ means a well-identified group of dealers set up by the institution to jointly manage a portfolio of trading book positions, or the non-trading book positions referred to in Article 104b, paragraphs 5 and 6, in accordance with a well-defined and consistent business strategy and operating under the same risk management structure;’

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN)

Added(x) ▌ point (145) is amended as follows:

RemovedRegulation (EU) No 575/2013

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

RemovedArticle 1 – paragraph 1 – point 50 b (new), Article 129 – paragraph 5: (50 b) Article 129(5) is replaced by the following: / "5. Covered bonds for which a directly applicable credit assessment by a nominated ECAI is not available shall be assigned a risk weight on the basis of the risk weight assigned to senior unsecured exposures to the institution which issues them. The following correspondence between risk weights shall apply: / (aa) if the exposures to the institution are assigned a risk weight of 30 %, the covered bond shall be assigned a risk weight of 15 %; / (ab) if the exposures to the institution are assigned a risk weight of 40 %, the covered bond shall be assigned a risk weight of 20 %; / (ba) if the exposures to the institution are assigned a risk weight of 75 %, the covered bond shall be assigned a risk weight of 35 %; / (d) if the exposures to the institution are assigned a risk weight of 150 %, the covered bond shall be assigned a risk weight of 100 %"

Added‘(f) the institution's consolidated assets or liabilities relating to activities with counterparties located in the European Economic Area, excluding intragroup exposures in the European Economic Area, exceed 75% of both the institution’s consolidated total assets and liabilities, excluding in both cases the intragroup exposures,’;

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN)

Added(b) the following subparagraph is inserted:

RemovedRegulation (EU) No 575/2013

Added‘For the purposes of point (e), an institution may exclude derivative positions it entered with its non-financial clients and the derivatives positions it uses to hedge those positions, provided that the combined value of the excluded positions calculated in accordance with Article 273a(3) does not exceed 10% of the institution’s total on- and off-balance sheet assets.’;

RemovedArticle 1 – paragraph 1 – point 51, Article 131 – Table 7: deleted / (deleted) / (deleted)

Added(y) the following points are added:

RemovedRegulation (EU) No 575/2013

Added‘(151) ‘revolving exposure’ means any exposure whereby the borrower’s outstanding balance is permitted to fluctuate based on its decisions to borrow and repay, up to a limit established by the lending institution;

RemovedArticle 1 – paragraph 1 – point 51 a (new), Article 132c – paragraph 2 – subparagraph 1: (51 a) in Article 132c(2), subparagraph 1 is replaced by the following: / "Institutions shall calculate the exposure value of a minimum value commitment that meets the conditions set out in paragraph 3 of this Article as the discounted present value of the guaranteed amount using a discount factor that is derived from a risk free rate. Institutions may reduce the exposure value of the minimum value commitment by any losses recognised with respect to the minimum value commitment under the applicable accounting standard."

Added(152) ‘transactor exposure’ means any revolving exposure that has at least 12 months of repayment history and that is one of the following:

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN)

Added(a) an exposure for which, on a regular basis of at least every 12 months, the amount to be repaid at the next scheduled repayment date is determined as the drawn amount or an instalment at a predefined reference date or upon contractual repayment modalities, with all scheduled repayment dates not later than after 12 months, provided that the amount or instalment owed to the lending institution has been repaid in full at each scheduled repayment date for the previous 12 months;

RemovedRegulation (EU) No 575/2013

Added(b) an overdraft facility where there have been no drawdowns over the previous 12 months;

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 4 – subparagraph 1 – point b: (b) private equity investments, investments in venture capital firms or investments which are acquired in anticipation of significant short-term capital gains.

Added(152a) ‘fossil fuel sector entity’ means a company, enterprise or undertaking primarily active in deriving any revenues from exploration, mining, extraction, production, processing, storage, refining or distribution, including transportation, storage, and trade, of fossil fuels as defined in Article 2, point (62), of Regulation (EU) 2018/1999 of the European Parliament and of the Council*.

RemovedRegulation (EU) No 575/2013

AddedEBA shall issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, to specify the conditions under which the company, enterprise or undertaking is to be considered primarily active in deriving any revenues from exploration, mining, extraction, production, processing, storage, refining or distribution, including transportation, storage and trade, of fossil fuels.

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 4 – subparagraph 2: By way of derogation from the first subparagraph, long-term equity investment, including investments in equities of corporate clients with which the institution has or intends to establish a long-term business relationship and debt-equity swaps for corporate restructuring purposes shall be assigned a risk weight in accordance with paragraph 3 or 5, as applicable. For the purposes of this Article, a long-term equity investment is an equity investment that is held for three years or longer or incurred with the intention to be held for three years or longer as approved by the institution’s senior management.

Added(152b) ‘assets or activities subject to impacts from environmental and/or social factors’ means assets or activities impacting the ambition of the Union to achieve climate neutrality as specified in Article 3, point (69a) of Directive 2013/36/EU.

RemovedRegulation (EU) No 575/2013

Added(152c) ‘shadow-banking-entity’ means an entity that offers banking services or performs banking activities and that it is not subject to prudential requirements similar to those imposed by this Regulation.

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 5 – introductory part: 5. Institutions that have received the prior permission of the competent authorities, may assign a risk weight of 100 % to equity exposures incurred under legislative programmes to promote specified sectors of the economy, up to the part of such equity exposures that in aggregate does not exceed 10 % of the institution’s own funds, that comply with all of the following conditions:

Added________________________

RemovedRegulation (EU) No 575/2013

Added* Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).’;