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Q&As refer to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.

Please note that the Q&As related to the supervisory benchmarking exercises have been moved to the dedicated handbook page. You can submit Q&As on this topic here.

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List of Q&A's

Risk weight for exposures to unrated institutions

Does Article 121 allow unrated institutions to be assigned government ratings only in the case of a government guarantee for the deposits of that bank? Additionally, does Article 121(3) apply to unrated institutions as well? Does it say that if we have a cash balance in an unrated bank we should assign a risk weight of 20%?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1869
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 11/12/2015

When should an external rating be considered as a primary factor determining an internal rating assignment

Concerning the practical application of the RTS on materiality: When should an external rating be considered as a 'primary factor' determining an internal rating assignment, and by what measure is the relative importance of the different variables comprising an internal model for credit risk to be evaluated?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 529/2014 - RTS on materiality of extensions and changes in the advanced approaches (IRB and AMA)
  • ID: 2015_1859
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 19/06/2015

Applicable exposure class for exposures to institutions based in a third country that does not apply prudential supervisory and regulatory requirements

For those institutions based in a third country that does not apply prudential supervisory and regulatory requirements at least equivalent to those applied in the Union, should the exposure class to these institutions be disclosed as an exposure to corporate or exposure to institution? 

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1806
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Recognition of additional credit protection in the regulatory LGD

It is not clear whether an institution with an IRB Approach permission (Foundation Approach; PD models only) should notify the competent authorities in accordance with Article 143 if they want to recognise additional credit protection in the regulatory LGD in accordance with Article 161(1).

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 529/2014 - RTS on materiality of extensions and changes in the advanced approaches (IRB and AMA)
  • ID: 2015_1792
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 19/06/2015

Credit Risk Mitigation

Can an institution legally "ring fence" cash it has to mitigate an exposure to a counterparty (using it as financial collateral)? The institution does not wish to notify the counterparty. The CRR is not clear on whether financial collateral used to mitigate an exposure must come from the counterparty or not.

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1776
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 10/07/2015

Assignment of irrevocable standby letters of credit and guarantees, which neither have the character of credit substitutes nor are related to trade finance, to the relevant risk category according to Annex I of the CRR.

Are irrevocable standby letters of credit and guarantees, which neither have the character of credit substitutes nor are related to trade finance, assigned to the risk category ‘medium risk’ according to Annex I?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2015_1728
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Risk weight of guarantees not in the domestic currency of the borrower

What is the correct risk weight of a loan, which has been granted to a client in euro, and guaranteed by an EU central government also in euro, but the domestic currency of the borrower is not euro?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1697
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Definition of the exposure portfolio for which permanent partial use of standardised approach can be applied for by a credit institution using the IRB approach

Can an IRB credit institution have the standardised approach applied to type of clients to whom the IRB approach is being used? I.e. if the standardised approach is approved for a specific portfolio of exposures, can this portfolio be defined by the type of client only or may it also be defined by the type of business?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1678
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 10/04/2015

Balance Sheet Netting as a CRM technique

Is Balance Sheet Netting according to Article 195 limited to Cash Balances in the same currency?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1413
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

PD substitution and eligibility of guarantors

Article 202(d) of Regulation (EU) No 575/2013 (CRR) suggests that where risk weighted exposure amounts are calculated under the IRB Approach, a guarantor must have an internal rating in order to be eligible as a guarantor for PD substitution. Can a guarantor, which is rated by an ECAI, and otherwise meets all eligibility requirements but is treated under the Standardised Approach by the institution, be used for PD substitution? How can a guarantee be recognised in this situation?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1381
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 04/09/2015

Classification of invoice discount facilities as full risk items

1. Should invoice discount facilities always be classified as full risk items or may such facilities be classified as medium/low or low risk if they may be cancelled with immediate effect when the assumptions used for setting the limit change? 2. Should the nominal value of an invoice discount facility as an off-balance sheet item be calculated as the difference between the contractual limits of the total credit volumes of clients and the amounts that have been paid to clients for the discounted invoices not yet due for payment from customers?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1324
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 31/10/2014

Material exposure in connection with term "days past-due" in the definition of non-performing exposure

What is the reading of the term "material" exposure in connection with "days past-due" for the purpose of definition of non-performing exposure?Can the "materiality threshold" be applied in a way that the counting of days past due starts when the past-due amount of the whole exposure of the obligor exceeds pre-defined materiality threshold?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_1297
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 11/01/2019

Use of an insitution's own estimates of conversion factors

In applying Article 166(10) of Regulation (EU) No 575/2013 (CRR), may competent authorities grant permission to institutions to use their own estimates of conversion factors (as is permitted for certain exposures under Articles 151(7) and (9)) for off-balance sheet exposures which are not listed under Article 166(8)?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1263
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Leasing: Residual value risk

In the calculation of the exposure value for residual value risk of leased assets, is the "residual value" that has to be multiplied with 1/t (a) the residual value on the date of calculation / the reporting date or (b) the estimated residual value at the end of the lease term?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1241
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 06/03/2015

Inclusion of expected loss for equity exposures in calculation of Expected loss amount reducing CET1

Shall the expected loss amount for equity exposures under the IRB approach be offset against the specific and general credit risk adjustments of all risk positions?If not, how shall they be treated? Does it has to be deducted from CET 1 in either case, also if there is a surplus increasing T2 according to Article 62 (d)?Does this also mean that EL for equity exposures shall be reported in CA4 row 140 respective 155 or not?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
  • ID: 2014_1217
  • Topic: Credit risk
  • Date of submission:
  • Published as Rejected Q&A: 11/02/2022

Recognition of real estate as commercial property

1. What kind of assets are to be included in the “Residential” and “Commercial” categories within “Mortgage Loans” for the purposes of supervisory reporting? For instance where should institutions assign garages, plots of land, storage rooms and rustic property etc. which are used as collateral? Are there more specific criteria to be used in assigning these assets? 2. Can we recognize as Commercial Real Estate the following types of property: Land for development, factories, plots of land for commercial purposes, slotted houses, schools and quarries etc.?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1214
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 21/11/2014

Eligible collateral for the purpose of credit risk mitigation

Are American Depository Receipt (ADR) and Global Depository Receipt (GDR) considered as equity for the purpose of credit risk mitigation?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1073
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 25/07/2014

Inclusion of partial write-offs in credit risk adjustments

Are partial write-offs of loans in the banking book, accounted at amortised cost, to be included in the determination of specific and general credit risk adjustments set out in Article 110(4).

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) No 183/2014 - RTS for the calculation of specific and general credit risk adjustments
  • ID: 2014_1064
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 19/12/2014

Definition of independent valuer referred to in Article 229(1) of Regulation (EU) No 575/2013 (CRR)

1. What is a definition of independent valuer referred to in Article 229(1)? 2. Whether the definition of independent valuer referred to in Article 229(1) is specified in Article 208(3)(b)? 3. Whether independent valuer is defined as a person who possesses the necessary qualifications, ability and experience to execute a valuation and who is independent from the credit decision process? 4. Whether the Regulation (EU) No 575/2013 (CRR) imposes additional obligations than those indicated in Article 208(3)(b) on a person who execute valuation as independent valuer? 5. Whether an independent valuer referred to in Article 229(1) may be an employee of the bank? 6. Whether CRR excludes the possibility of valuing the property for the purposes of Article 229(1) by employees of the bank?

  • Legal act: Regulation (EU) No 575/2013 (CRR)
  • COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
  • ID: 2014_1056
  • Topic: Credit risk
  • Date of submission:
  • Published as final Q&A: 03/10/2014