Changes from report parliamentary committee draft to plenary report

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 5 – point a: (a) the legislative programs provide significant subsidies or guarantees, including by multilateral development banks, public development credit institutions as defined in Article 429a(2) or international organisations, for the investment to the institution;

Added(1a) in Article 4, the following paragraph is added:

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Added‘4a. For the purposes of point (18), point (c), of paragraph 1, EBA shall issue guidelines specifying the criteria for the identification of activities by ... [OP please insert date = 1 year after entry into force of this Regulation].

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 5 – point ba (new): (ba) legislative programmes or guarantees involve restrictions on the equity investment, such as limitations on the size and types of businesses in which the institution is investing, on allowable amounts of ownership interests, on the geographical location and on other pertinent factors that limit the potential of the investment for the investing institution;

AddedThose guidelines shall be adopted in accordance with Article 16 of Regulation (EU) No 1093/2010.’

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Added(2) Article 5 is amended as follows:

RemovedArticle 1 – paragraph 1 – point 52, Article 133 – paragraph 5 – point c: deleted

Added(a) point (3) is replaced by the following:

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Added‘(3) ‘expected loss’ or ‘EL’ means the ratio, related to a single facility, of the amount expected to be lost on an exposure from any of the following:

RemovedArticle 1 – paragraph 1 – point 53 – point a a (new), Article 134 – paragraph 6: (a a) paragraph 6 is replaced by the following: / "6. Risk-weighted exposure amounts shall be calculated for first-to-default credit derivatives. For that purpose, the risk-weights of the underlying assets included in the basket shall be aggregated up to a maximum of 1250 % and multiplied by the nominal amount of the protection provided by the credit derivative to obtain the risk-weighted exposure amount for the exposure related to that derivative. / For second-to-default credit derivatives, the treatment shall be identical, except that in aggregating the risk-weights, the underlying asset with the lowest risk-weighted exposure amount shall be excluded from the calculation. Such a treatment shall also apply for nth-to-default credit derivatives, for which the n-1 assets with the lowest risk-weighted exposure amounts shall be excluded from the calculation.’;

Added(i) a potential default of an obligor over a one-year period to the amount outstanding at default;

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02013R0575-20230628&from=EN)

Added(ii) a potential dilution event over a one-year period to the amount outstanding at the date of occurrence of the dilution event;’;

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Added(b) the following points (4) to (10) are added:

RemovedArticle 1 – paragraph 1 – point 56, Article 139 – paragraph 2 – point a – point i: (i) is not a specialised lending exposure or an exposure in the form of a covered bond;

Added‘(4) ‘credit obligation’ means any obligation arising from a credit contract, including principal, accrued interest and fees, owed by an obligor to an institution or, where the institution serves as a guarantor, owed by an obligor to a third party;

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Added(5) ‘credit exposure’ means any on-balance sheet item, including any amount of principal, accrued interest and fees owed by the obligor to the institution, or any off-balance sheet item that results, or may result, in a credit obligation;

RemovedArticle 1 – paragraph 1 – point 56, Article 139 – paragraph 2 – point b – introductory part: (b) the credit assessment produces a lower risk weight than would be the case when the exposure is treated as unrated and the exposure concerned:

Added(6) ‘facility’ means a credit exposure arising from a contract ▌between an obligor and an institution;

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Added(7) ‘margin of conservatism’ means an ▌add-on incorporated in risk estimates, adequate to account for the expected range of estimation errors stemming from identified deficiencies in data, methods, models, and changes to underwriting standards, risk appetite, collection and recovery policies and any other source of additional uncertainty, as well as from general estimation error;

RemovedArticle 1 – paragraph 1 – point 56, Article 139 – paragraph 2 – point b – point i: (i) is not a specialised lending exposure or an exposure in the form of a covered bond;

Added(8) ‘small and medium-sized enterprise’ or ‘SME’ means a company, enterprise or undertaking which, according to the last consolidated accounts, has an annual turnover not exceeding EUR 50 000 000;’

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Added(9) ‘commitment’ means any contractual arrangement that an institution offers to a client and is accepted by that client, to extend credit, purchase assets or issue credit substitutes. Any arrangement that can be unconditionally cancelled by the institution at any time without prior notice to the obligor or any arrangement that can be cancelled by the institution where the obligor fails to meet conditions set out in the facility documentation, including conditions that must be met by the obligor prior to any initial or subsequent drawdown under the arrangement, is a commitment;

RemovedArticle 1 – paragraph 1 – point 58 – point a, Article 142 – paragraph 1 – point 1c: (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);

AddedContractual arrangements that meet all of the following conditions shall not be commitments:

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Added(a) contractual arrangements where the institution receives no fees or commissions to establish or maintain those contractual arrangements;

RemovedArticle 1 – paragraph 1 – point 58 – point a, Article 142 – paragraph 1 – point 1e: (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) contractual arrangements where the client is required to apply to the institution for the initial and each subsequent drawdown under those contractual arrangements;

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Added(c) contractual arrangements where the institution has full authority, regardless of the fulfilment by the client of the conditions set out in the contractual arrangement documentation, over the execution of each drawdown;

RemovedArticle 1 – paragraph 1 – point 58 – point b, Article 142 – paragraph 1 – point 2: (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(d) contractual arrangements where the institution is required to assess the creditworthiness of the client immediately prior to deciding on the execution of each drawdown;

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Added(e) contractual arrangements that are offered to a corporate entity, including an SME, that is closely monitored on an ongoing basis.

RemovedArticle 1 – paragraph 1 – point 61 – point a, Article 147 – paragraph 2 – point c – introductory part: (c) exposures to corporates shall be assigned to the following exposure classes:

Added(10) ‘unconditionally cancellable commitment’ means any commitment the terms of which permit the institution to cancel that commitment to the full extent allowable under consumer protection and related legislation where applicable at any time without prior notice to the obligor or that effectively provide for automatic cancellation due to deterioration in a borrower's creditworthiness.’;

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Added(3) in Article 6, paragraph 3 is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 61 – point a, Article 147 – paragraph 2 – point d – introductory part: (d) retail exposures, shall be assigned to the following exposure classes:

Added‘3. No institution which is either a parent undertaking or a subsidiary, and no institution included in the consolidation pursuant to Article 18, shall be required to comply on an individual basis with the obligations laid down in Article 92, paragraphs 5 and 6, and Part Eight.’;

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Added(3a) in Article 7, the following paragraph is added:

RemovedArticle 1 – paragraph 1 – point 61 – point e – point i, Article 147 – paragraph 5 – point a – point ii: (ii) exposures to an SME within the meaning of Article 5, point (8), provided in that case that the total amount owed to the institution and parent undertakings and its subsidiaries, including any exposure in default, by the obligor client or group of connected clients, but excluding exposures secured by residential property up to the property value does not, to the knowledge of the institution, which shall take reasonable steps to verify the amount of that exposure, exceed EUR 1 million;

Added‘3a. By 31 December 2026, the Commission shall report to the European Parliament and the Council on the possibility of allowing for the application of paragraph 1 also to a subsidiary that is subject to authorisation and supervision by a Member State other than the Member State that authorises and supervises the institution which is the parent undertaking. The Commission shall pay particular attention to progress made on completing the banking union, and more particular to improvements made to the banking crisis management and deposit insurance framework which can address potential financial stability concerns resulting from applying paragraph 1 on a cross-border basis.

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AddedThe Commission shall also consider whether or not additional prudential safeguards and technical modifications could further address any potential financial stability concerns resulting from the waiver from the application of individual requirements on a cross-border basis.

RemovedArticle 1 – paragraph 1 – point 61 – point e – point iii, Article 147 – paragraph 5a – subparagraph 1 – introductory part: 5a. Retail exposures belonging to a type of exposures meeting all the following conditions shall be assigned to the QRRE exposure class:

AddedThe report shall address the case of partial waivers from prudential requirements, taking into consideration whether the application of waivers on a cross-border basis, should be accompanied by the requirement for the relevant subsidiaries to still have adequate minimum levels of own funds to ensure their resilience, also in distressed situations. Competent authorities may define an adequate amount, taking into account the efficiency of group risk management and the effectiveness of the group financial support arrangement in resolution.

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AddedThat report may, where appropriate, be accompanied by a legislative proposal. In the event that the Commission considers that the conditions to make a legislative proposal are not yet met, the Commission shall report on progress made on the banking union every two years until such time it deems it appropriate to make such a legislative proposal.’;

RemovedArticle 1 – paragraph 1 – point 61 – point e – point iii, Article 147 – paragraph 5a – subparagraph 1 – point a: (a) the exposures of that type of exposures are to one or more natural persons;

Added(3b) Article 8 is replaced by the following: