According to Article 395(1) CRR ‘An institution shall not incur an exposure to a client or group of connected clients the value of which exceeds 25 % of its Tier 1 capital, after taking into account the effect of the credit risk mitigation in accordance with Articles 399 to 403. Where that client is an institution or an investment firm, or where a group of connected clients includes one or more institutions or investment firms, that value shall not exceed 25 % of the institution’s Tier 1 capital or EUR 150 million, whichever is higher, provided that the sum of exposure values, after taking into account the effect of the credit risk mitigation in accordance with Articles 399 to 403, to all connected clients that are not institutions or investment firms, does not exceed 25 % of the institution’s Tier 1 capital.’

And according to Article 395(5)(a) CRR the large exposure limits  (i.e. under Article 395(1) CRR) may be exceeded for the exposures in the institution's trading book, provided that i.a.:

1. the exposure in the non-trading book to the client or group of connected clients in question does not exceed the limit laid down in paragraph 1 (i.e. Article 395(1) CRR), this limit being calculated with reference to Tier 1 capital, so that the excess arises entirely in the trading book.

On June 27, 2020 Regulation (EU) 2020/873 of the European Parliament and of the Council of 24 June 2020 amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic entered into force. This Regulation introduced new rules concerning transitional provisions on exposures to the central governments and central banks of Member States, where those exposures are denominated and funded in the domestic currency of another Member State. In particular the new Article 500a(2) CRR stipulated:

‘By way of derogation from Articles 395(1) and 493(4), competent authorities may allow institutions to incur exposures referred to in paragraph 1 of this Article, up to the following limits:

(a) 100 % of the institution’s Tier 1 capital until 31 December 2023;

(b) 75 % of the institution’s Tier 1 capital between 1 January and 31 December 2024;

(c) 50 % of the institution’s Tier 1 capital between 1 January and 31 December 2025.’

Taking all the above into account, it is not clear which limit value should apply both in Article 395(5) first paragraph CRR and in Article 395(5)(a) CRR when the permission under Article 500a(2) CRR has been granted, that is should it be

• the value literally stated both in Article 395(5) first paragraph CRR and in Article 395(5)(a) CRR by the reference to Article 395(1) CRR and which was originally used, i.e. 25% (with the possible adjustments as stipulated in Article 395(1) CRR)

or

• the value stated in the permission, i.e. the maximum of 100% in 2023, 75% in 2024 and 50% in 2025 (with possible reductions if restricted in the permission) that was granted under Article 500a(2) CRR.