EBA publishes amended technical standards on credit risk adjustments
The European Banking Authority (EBA) published today its final report on the draft Regulatory Technical Standards (RTS) amending its RTS on credit risk adjustments in the context of the calculation of the Risk Weight (RW) of defaulted exposures under the Standardised Approach (SA) of credit risk. The proposed amendments follow up on the European Commission’s Action Plan to tackle Non-Performing Loans (NPL) in the aftermath of the COVID-19 pandemic, which indicated the need for a revision of the treatment of purchased defaulted exposures under the SA. This revision is necessary to ensure that the prudential framework does not create disincentives to the sale of non-performing assets by banks.