The European Banking Authority (EBA) published today the list of public sector entities (PSEs) that may be treated as regional governments, local authorities or central governments in the area of credit risk, in accordance with the Capital Requirements Regulation (CRR). This list will assist EU institutions in determining their capital requirements for credit risk.
The EBA has compiled this list on its own initiative to enhance harmonisation in the treatment of exposures to EU public sector entities (PSEs) using the standardised approach (SA) to capital requirements. In particular, the list includes those PSEs that are treated as regional governments, local authorities or central governments due to their reduced risk level. As a result of this treatment, exposures to the PSEs included in the list will qualify for the same risk weight as for the respective regional government, local authority or central government.
The list was compiled using the information provided by the Competent Authorities and is based on the classification used in each individual country. Hence the differences in the approaches and eligibility criteria for PSEs across countries.
Legal basis and next steps
The list has been developed on the EBA's own initiative to supplement the requirements laid down in Article 116 of the –Capital Requirements Regulation (CRR).
In the context of its future work programme, the EBA plans to review and further harmonise the criteria used for the eligibility of PSEs for such treatment.